ECON 3430 Study Guide - Midterm Guide: Gdp Deflator, Commodity Money, Mutual Fund

• School: York University
• Department: Economics
• Course: ECON 3430
• Professor: Brenda Spotton- Visano

Document Summary

Introduction to money & the financial system (1) 5 parts of the financial system: money = to pay for purchases & to store our wealth. ^ once coin, then paper & now electronic funds: financial instruments = transfer resources from savers to investors & to transfer risk to those who are best equipped to bear it (e. g. stocks, mortgages) ^ transactions costs for buying stocks was costly, making a portfolio was time consuming, only meant for the wealthy. Mutual funds construct portfolios of 100s or 1000s of stocks &/or bonds: financial markets = allow to buy & sell financial instruments quickly (e. g. tsx) ^ took place in big city exchanges (nyse), is now handled by electronic networks. Today"s markets offer much broader array of financial instruments: financial institutions = provide a myriad of services (access to financial markets, info about borrowers to ensure creditability). (e. g. banks, insurance companies)