Financial Sector Flashcards
The financial sector and financial institutions
What is the financial sector
The part of the economy that involves businesses that links spenders and savers
What is the role of the financial sector?
The financial sector provides funds to individuals, firms and government in order them in order for them to pursue economic activities
What is the financial sector involved in?
The financial sectors are involved in the mobilization of funds from savers and the supply of these funds to spenders
What are the functions of the financial sector
To attract funds from businesses and individuals by providing people with an alternative place to put their extra funds. It makes savings attractive by paying interest on the sum saved and keeping the funds secured.
it provides provides funds to government, firms and private individuals for investment purposes by purchasing bonds and providing loans
provides compensation for when mishaps occur reducing risk in this economy
What is the informal sector in the economy
The informal sector is the part of the economy where economic activities are not under official control
what are the characteristics of the informal sector
workers do not pay taxes
there are no official records in informal sector
informal sector provides jobs and reduces unemployment
many cases the jobs are low paid
there is no job security
what do individuals spend on
goods and services for final consumption
what do firms spend on
capital and labor for production
what do the government spend on
they spend our infrastructure and public goods
how does the informal sector provides individuals with Finance
money lenders
Pawnbrokers
rotating savings
who is the head of the financial sector
the central bank
what is the purpose of the Central Bank
to oversee all operations in the financial sector
the Implement monetary policy on behalf of the government
what are the functions of the Central Bank
to issue notes and coins for the country
to provide banking services for the government
it is the Bank of all Commercial Bank
to implement monetary policy on behalf of the government
to manage foreign exchange Reserves
to supervise non-bank financial institutions
what is a contractionary monetary policy
where the Central Bank reduces the money supply that comes into the economy and increases the interest rates
what is the expansionary monetary policy
where the Central Bank decreases the interest rates and increases the money supply that comes into the economy
