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L.O.1
FINANCIAL INTERMIDIARIES
L.O2 L.O.1
MONEY CREATION FINANCIAL
L.O3 INTERMIDIARIES
DEMAND FOR MONEY
L.O 4
INTEREST RATE DETERMINATION
L.O 5
FISCAL POLICIES, INTEREST RATES AND INVESTMENT
Is an Institution , Firm ,Individual who The first party provides SERVICES, and
performs intermediation between two the second party is a CONSUMER or
or more parties in a financial context. CUSTOMER.
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1. DEPOSIT INSTITUTION
• COMMERCIAL BANKS DEPOSIT INSTITUTION
• THRIFT INSTITUTION(saving, loans association,
mutual savings bank)
• Credit union
2. NON-DEPOSIT INSTITUTION Accept deposits from people and business
• LIFE INSURANCE to use in the future
• INVESTMENT COMPANY
• CONSUMER FINANCE COMPANY
• MORTGAGE COMPANY
• CHECK CASHING OUTLET
• PAWNSHOP
NON-DEPOSIT INSTITUTION
CREDIT UNIONS
Not like banks, no deposit made and solely
Is a user owned, not for profit, for borrowing by means of collateral
cooperative financial institution. transactions only.
Commonly formed by people in the same
company, government agency, labor
union, profession, church or community.
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Offers buying convenience for consumers Offering small loans based on the value of
who want to delay payment for their some tangible possession such as
purchases jewelry. It commonly charge higher fees
than other lending institution
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TRANSACTIONS DEMAND
It is the transaction motives, in other
words, people expect to make
THREE DISTINCT CATEGORIES transactions for goods and services
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RATES
L.O 4 It increased during good times, called economic
expansions.
INTEREST RATE
DETERMINATION This helps keep the economy from growing too fast and
suffering from inflation.
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NEO-KEYNESIAN
Believes that incentives affects of fiscal
intervention exists but are too small are
PERSPECTIVE OF
significant
FISCAL POLICY
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MONETARIST POST-KEYNESIAN
Believe that the economy is inherently Believes that money growth is insufficient
stable and recommended a small
government sector to allow market Advocate some public direction of
forces to operate efficiently investment
SUPPLY-SIDER
They said to have “tax cut fetishism”