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Chapter 11.1 notes. Saving Saving = not spending $ Investment – use of income today for a future benefit.

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Presentation on theme: "Chapter 11.1 notes. Saving Saving = not spending $ Investment – use of income today for a future benefit."— Presentation transcript:

1 Chapter 11.1 notes

2 Saving Saving = not spending $ Investment – use of income today for a future benefit

3 Financial System Financial system – network of savers, investors and financial institutions; transfers $ from savers to investors (borrowers) Financial intermediary – institution that transfers funds from savers to investors in financial assets

4 Circular Flow of Funds Look on pg. 319 – please draw the chart

5 Banking Intermediaries Banks, credit unions, etc. Offer things like Certificates of Deposit and Money Market Accounts – you loan money to bank, they pay you back with interest BUT money is not accessible for a period of time CD – can be longer than a year MMA – up to 1 year

6 Nonbank Financial Intermediaries Mutual Funds – investment co. that pools $ from investors and buys a range of assets (you buy stock in the mutual fund) Pension Fund – people make deposits to secure payments for retirement Finance Company – loans small amounts of $ to HH and businesses Life insurance company – you pay a premium to build $ to insure against death/disability


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