Topic 23 · macro
The Financial System
The savings of some turn into the investment of others through banks and markets — that is how the financial system works.
Why it is needed
The financial system links those who have spare money (savers) with those who need it for a venture (borrowers and firms).
Through what
Banks (take deposits, give loans) and securities markets (shares — a stake in a company, bonds — debt). These are channels from savings to investment.
Savings = investment
In the economy, savings feed investment. The more efficiently the system turns one into the other, the faster the economy grows.
🎯 Now possible
- explain the role of the financial system
- tell shares from bonds
- link savings to investment
Cheat sheet
The system links savers and borrowers
Channels: banks and securities markets
A share — a stake, a bond — debt
Savings feed investment → growth
Practice on this topic
Where to read more: Мэнкью — гл. 27–28Макконнелл–Брю — макроэкономика