Financial Markets Notes: The Flow of Funds and Determination of Interest Rates

tOPIC 3: The lean of notes and Determination of Inte sojourn Rates Objective 1 Identify the chief(prenominal) features of the piece played by the glacial areas of the frugality in the add of funds between overabundance and shortage units. 3.1 The combine of funds In issue 1, one of the main functions of a nations mo plunderary automobile trunk that was identified was to facilitate the deepen of funds from overplus to dearth stinting units, in native financial markets, by the buggy asylum of new financial assets. That is to mobilise the savings of overplus economic units and transfer these funds, all directly or indirectly, to dearth units in lay to pay their planned expenditure. In examining the take to the woods of funds there are cardinal aspects that are of engross to financial market observers: sectoral balances institutional features The latter aspect is pertain with the persona played by different types of financial institutions in the flow of funds by means of indirect or intermediated finance. As this was examined in Topic 2, this section for provoke focalise on the sectoral balances aspect of the flow of funds. 3.1.

1 Sectoral balances The domestic economy comprises three aggregate sectors: households corporations government When we expand our pore to the open economy, we add a fourthly sector: the rest of the world Finally, when examining the financial system, we separate issue a subset of the corporations sector, because of the special role that particular organisations play in the summons of the financial system, and draw a fifth sector: financial corporations These quintuplet aggregate sectors can be examined in terms of their general role and position concerning the borrow and change of funds at heart the financial system. Clearly, each sector will comprise a number of both surplus and deficit units but it is the net position of the... If you want to get a full essay, order it on our website: Ordercustompaper.com

If you want to get a full essay, wisit our page: write my paper