Money and Banking Study Guide Chapter 1-5

Chapter 1- Why study Money, Banking and fiscal Markets? Why are pecuniary Markets Important? Financial markets are crucial to promoting greater sparing efficiency by channeling funds from multitude who do non concord a productive use for them to those who do. Well go financial markets are a key factor in producing high economic growth, and poorly performing financial markets, frailty versa. Financial markets and intermediaries have the basic function of getting people together by moving funds from those who have a surplus of funds to those who have a shortage of funds. The grandness of Interest Rates On a personal direct, high affair rates idler deter you from buying a signaling or a car because the cost of financing would be too high. Conversely, they could encourage you to save because you earn more entertain by putting your money aside in savings. ON a more general level, please rates shine the overall health of the economy because they restore not plainly consumers willingness to spend but also businesses investment decisions. High interest rates for example might cause a mint to postpone building a new plant that would picture more jobs.

The Importance of Stocks On a personal level the fluctuations in stock scathes affect the size of peoples wealth and as a result may affect their willingness to spend. On a general level, it affects business investment decisions since the equipment casualty of shares affects the issue forth of funds that can be raised by selling newly issued stock to finance investment spending. A higher price for a firms shares government agency that it can raise a larger amount of funds, which it can use to buy production facilities and equipment. A higher price means it can raise a larger amount of funds, which it can use to buy production facilities and equipment. Role of Financial Intermediaries Financial intermediaries are institutions that borrow funds from people who have saved and in turn make loans to others. Banks are include in... If you want to get a full essay, order it on our website: Ordercustompaper.com

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