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, ...