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For more information, please see full course syllabus of AP Macroeconomics
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Lecture Comments (16)

1 answer

Last reply by: Professor Jibin Park
Fri Aug 28, 2015 11:52 AM

Post by Jim Tang on August 28, 2015

what is a loan-backed security? i'm assuming it's a loan that is backed by something to ensure security?

1 answer

Last reply by: Professor Jibin Park
Sat Mar 21, 2015 5:21 PM

Post by kevin wang on March 18, 2015

It is very intriguing to know that owning one share of apple means you own 1/900,000,000th of the company.

1 answer

Last reply by: Professor Jibin Park
Fri Mar 13, 2015 10:52 AM

Post by Eric Liu on March 13, 2015

That is very funny that owning one share of apple means you own 1/900,000,000th of the company

1 answer

Last reply by: Professor Jibin Park
Fri Mar 13, 2015 10:52 AM

Post by Kaitlyn Eng on March 13, 2015

So basically financial systems are the companies who fill those three tasks?

1 answer

Last reply by: Professor Jibin Park
Fri Mar 13, 2015 10:52 AM

Post by Caroline Torres on March 13, 2015

Another great lecture, though no one will appreciate a Park's Place bond as much as your AP Econ students will!

1 answer

Last reply by: Professor Jibin Park
Fri Mar 13, 2015 10:54 AM

Post by Kimberly Wong on March 12, 2015

It was good to hear that the limit the FDIC guarantees has been raised to 250,000. The Krugman Wells book has the limit printed as 100,000.

1 answer

Last reply by: Professor Jibin Park
Fri Mar 13, 2015 10:55 AM

Post by Hillary Hermawan on March 12, 2015

Thank you for this lecture! I enjoyed your Shark Tank allusion when you talked about bonds.

1 answer

Last reply by: Professor Jibin Park
Thu Mar 12, 2015 6:03 PM

Post by Rodrigo Rodarte on March 12, 2015

Between bonds, loaned-back securities, and stocks, which would be the best way to invest safely with fair return?

Saving, Investment & the Financial System

  • The savings-investment spending identity is such that savings = investment for the economy as a whole
  • If the government spends more than it collects in revenue, there is a budget deficit
  • If the government collects more revenue than it spends, there is a budget surplus
  • National savings = Private savings + Budget Balance
  • The three tasks of a financial systems are to reduce transaction costs, reduce risk and provide liquidity
  • Types of financial assets include bonds, loan-backed securities, stocks and mutual funds
  • Other financial intermediaries include pension funds, life insurance, banks and credit unions

Saving, Investment & the Financial System

Lecture Slides are screen-captured images of important points in the lecture. Students can download and print out these lecture slide images to do practice problems as well as take notes while watching the lecture.

  • Intro 0:00
  • Lesson Overview 0:08
  • Saving-Investment Spending Identity 1:49
    • Savings-Investment Spending Identity
    • Imagine a Country with No Government and No Trade
  • Budget Surplus and Deficit 7:34
    • Budget Surplus
    • Budget Deficit
    • Budget Balance
    • National Savings
  • Capital Inflows and Outflows 14:26
    • Cashflow
    • Capital Inflow
    • 2008 Example
  • Tasks of a Financial System 20:43
    • Reduce Transaction Costs
    • Reduce Risk
    • Provide Liquidity
  • Types of Financial Assets 25:29
    • Bonds
    • Loan-Backed Securities
    • Stocks
  • Financial Intermediary 31:56
    • Types of Financial Intermediaries
    • 75% of Wealth in U.S. is Held by These Four
  • Mutual Funds 33:08
    • Definition of Mutual Funds
    • Benefit
    • Downside
    • Households Owned Over $10 Trillion in Mutual Funds
    • Fidelity Investments
  • Pension Funds and Life Insurance 38:16
    • Pension Funds
    • Life Insurance
  • Banks 42:34
    • Accept Funds From Depositors
    • Keep a Fraction of Customers' Deposits in Cash Form
    • FDIC
  • Example 1 44:10
  • Example 2 45:01
  • Example 3 45:48
  • Example 4 47:34