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Introduction to Finance: Markets, Investments, and Financial Management, Fourteenth Edition by Edgar A. Norton, Ronald W. Melicher

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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, ...

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