ECON103 Lecture Notes - Lecture 11: Autarky, Longrun, Demand Curve
Document Summary
Chapter 10 economic growth, the financial system, and business. 10. 2 savings, investment, and the market for loanable funds. Suppose you want to start a business. What are the key components: sound business idea, a business plan, start-up capital/financing. Businesses (and governments) obtain funds/financing for their operations in financial markets. The loanable funds market is the market where savers (investors) supply funds for to loan for borrowers: savers (hhs, foreign entities) loanable funds market (banks, bonds, stocks) borrowers (firms, governments) Borrowing spurs investment, which generates future output (gdp) If someone wants to borrow to buy resources for a business, someone else has to save. If you started your own business, you either use your own savings, or you seek financing through the market for loanable funds. Suppose you need ,000 to start your coffee shop. If you borrow at an interest rate of 5%, you need to repay ,000 in one year.