26.1 Financial Institutions and Financial Markets
MyEconLab Concept Video
To see what determines interest rates and why they have been so low, we need to understand how financial institutions function and financial markets work. The health of these institutions and markets affect saving and investment and the performance of every other market—of the labor market and the markets for goods and services—and the pace of economic growth.
Some Finance Definitions
First, we need to distinguish between two forms of capital: physical and financial. We also need to distinguish among investment, capital, wealth, and saving.
Capital—also called physical capital—is the tools, instruments, machines, buildings, and other items that have been produced in ...
Get Foundations of Economics, 8th Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
