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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

What is the role of the financial system? Name and describe two markets that are part of the financial system in the U.S. economy. Name and describe two financial intermediaries.

To determine

The role of a financial system and the different financial markets and intermediaries.

Explanation

The system that allows the exchange of funds between the different sectors of the economy such as the lenders and the borrowers, lenders and the investors in the most possible form of the money, credit or the finance are known as the financial system. The financial system will operate under various levels in the economy such as the national levels and global levels etc. The main role of the financial system is to provide a matching between the savings of the one who have excess money to the demand of the one who makes an investment. Thus, the savings of someone will be matched with another person's investment under the financial system. There are two markets that are part of the financial system and they are Stock markets and the Bond markets.

The stock markets are the markets that exchange the stocks in order to raise the capital for the investment purpose. The stock is the share of the firm and the stock provides the share of the ownership right to the one who holds it...

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