Chapter 13 - Saving, Investment, and the Financial System

Mutual Funds

________- an institution that sells shares to the public and uses the proceeds to buy a portfolio of stocks and bonds.

Private

________ saving- the income that households have left after paying for taxes and consumption.

budget surplus

A(n) ________ increases the supply of loanable funds, reduces the interest rate, and stimulates investment.

National saving

________- the total income in the economy that remains after paying for consumption and government purchases.

Stock

________- a claim to partial ownership in a firm.

Public

________ saving- the tax revenue that the government has left after paying for its spending.

Investment

________ is the source of the demand for loanable funds.

Financial system

________- the group of institutions in the economy that helps to match one persons saving with another persons investment.

Bond

________- a certificate of indebtedness.

Loanable funds

________- comes from people who have some extra income they want to save and lend out.

Budget surplus

________- an excess of tax revenue over government spending.