Saving, Investment, and the Financial System

Flashcards about saving, investment, and the financial system.

Financial System

The system that allows the transfer of funds between savers and borrowers in the economy.

Financial Markets

Institutions through which savers can directly provide funds to borrowers in the marketplace.

Bond

A certificate of indebtedness.

Stock

A claim to partial ownership in a business.

Financial Intermediaries

Institutions through which savers can indirectly provide money or funds to borrowers in the economy.

Mutual Funds

Institutions that sell shares to the general public and use the proceeds to buy portfolios of stocks and bonds.

Private Savings

The portion of household's incomes that is not used for consumption or paying taxes.

Public Saving

The tax revenue received by the government minus government spending on final goods and services.

National Saving

The summation of private saving and public saving.

Budgetary Surplus

An excess of tax revenue over government spending.

Budgetary Deficit

A budgetary deficit occurs if capital t is less than capital g.

Investment

The purchase of new capital.