Economics 1022A/B Chapter 23: CH 23, Finance, Saving and Investment

• School: Western University
• Department: Economics
• Course: Economics 1022A/B
• Professor: Sunghoon Cho

Document Summary

Institutions that match one"s saving with other"s investment. Moves the economy"s scarce resources from savers to borrowers. When portion of gdp is saved, more resources are available for investment in capital, and higher capital raises country"s productive capacity. Higher saving in gdp/ higher more resources for investment/higher capital/higher productivity. Directly provide funds to borrows (bond market/ stock market) Indirectly provide funds to borrowers (banks and mutual funds) Money: set of assets in economy that people regularly use to buy g&s from other ppl. Finance: activity of providing funds that are used to purchase capital goods (provided by funds to be used in investments) Study of finance: looks at how households and firms obtain and use financial resources and how they cope with the risks that arise in this activity. Study of money: looks at how they use money, how much of it they hold, how banks create and manage is and how its quantity influences the economy.