Capital Market: Saving, Investment and Intermediaries Flashcards
1
Q
Saving
A
Current income minus spending on current needs
2
Q
Saving Rate
A
Saving divided by income
3
Q
Intertemporal substitution
A
The decision to forego current consumption in order to consume in the future
4
Q
r (interest rate or growth rate)
A
Value of Marginal Product of Capital (VMP) / Price of Capital (Pk) = r
5
Q
Financial Intermediary
A
middle-man between two parties in a financial transaction, such as commercial banks, investment banks and pension funds
6
Q
National Saving
A
The sum of public saving
S = Y - (C+G) = Y - C - G
7
Q
Private saving
A
Sprivate = Y = T – C
8
Q
Public saving
A
T – G
