Notes On The Financial System

Submitted By Jessicacrites
Words: 319
Pages: 2

Slide 2-
The Financial System-The group of institutions that help match the saving of one person with the investment of another.
Financial Markers-Institutions through which savers can directly provide funds to borrowers.
A Bond Is….A certificate of indebtedness.
A Stock Is….A claim to partial ownership in a firm
Slide 3-
Financial Intermediaries-Institutions through which savers can indirectly provide funds to borrowers. Example;
Banks
Mutual Funds-Institutions that sell shares to the public and use the proceeds to buy portfolios of stocks and bonds
Slide 4-Graph
Slide 7-
Private Savings-The portion of households’ income that is not used for consumptions or paying taxes. =Y-T-C
Public Savings-Tax revenue less government spending =T-G
Slide 8-
Private Saving+ Public Saving
=(Y-T-C) + (T-G)
=Y-C-G
The portion of national income that is not used for consumption or government purchases.
Slide 9-
I = Y-C-G = [(Y-T-C) + (T-G)] –National Savings
Saving = Investment in a closed economy
Slide 10-
Budget Surplus-An excess of tax revenue over govt spenting
T-G
=Public Saving
Budget Deficit-A shortfall of tax revenue from govt spending
G-T
= Negative (-) Public Saving

Active Learning
Given Y=10.0 C=6.5 G=2.0 G-T=.03
Public Saving T-G= -.03 (Deficit)
Taxes: T=G- .03=1.7
Private savings= Y-T-C= 10 – 17 – 6.5=1.8
National Saving Public + Private= -.03 +1.8= 1.5
Investment=national savings=1.5
Slide 16
Private Savings- Is the income remaining after