Introduction to Finance: Markets, Investments, and Financial Management, Fourteenth Edition

Chapter 7. Savings and Investment Process

Chapter Learning Objectives:

AFTER STUDYING THIS CHAPTER, YOU SHOULD BE ABLE TO:

• Identify and briefly describe the major components of the gross domestic product.

• Describe how the balance between exports and imports affects the gross domestic product.

• Describe recent developments in the aggregate level of personal and corporate savings.

• Describe the principal sources of federal government revenues and expenditures.

• Discuss the historical role of savings in the United States and how savings are created.

• Identify the major sources of savings in the United States.

• Identify and describe the factors that affect savings.

• Describe major capital market securities that facilitate the savings and investment process.

• Discuss the role of individuals in the recent financial crisis.

Where We Have Been. . .

Part 1 of this book introduced you to how the U.S. financial system works. In Chapter 1 you learned about the role of finance and were able to answer the question: What is finance? Chapter 2 provided you with information about the development of the U.S. monetary system, and Chapter 3 covered the importance of commercial banks and other financial institutions in helping the financial system operate smoothly. In Chapter 4 you learned about the Federal Reserve System and its monetary policy functions and instruments. After reading Chapter 5, you should have a better understanding of who the U.S. policy makers are and how they carry out monetary policy, fiscal policy, ...