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A Financial Intermediary Invests in Financial Assets Rather Than Real

question 43

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A financial intermediary invests in financial assets rather than real assets.


Definitions:

Desired Saving

The portion of income that households choose to save rather than spend on consumption.

Desired Investment

The level of investment that firms plan or wish to undertake based on their expectations of future economic conditions.

Interest Rate

The interest rate is the percentage charged on the total amount lent or paid on invested funds, typically expressed on an annual basis.

Loanable Funds

Money available for borrowing, which is determined by the savings in the economy plus the money provided by banks and other financial institutions.

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