New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Principles of Economics Macroeconomics

by: Nola Williamson

Principles of Economics Macroeconomics ECON 2020

Marketplace > University of Virginia > Economcs > ECON 2020 > Principles of Economics Macroeconomics
Nola Williamson
GPA 3.91

Lee Coppock

Almost Ready


These notes were just uploaded, and will be ready to view shortly.

Purchase these notes here, or revisit this page.

Either way, we'll remind you when they're ready :)

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

Lee Coppock
Class Notes
25 ?




Popular in Course

Popular in Economcs

This 4 page Class Notes was uploaded by Nola Williamson on Monday September 21, 2015. The Class Notes belongs to ECON 2020 at University of Virginia taught by Lee Coppock in Fall. Since its upload, it has received 16 views. For similar materials see /class/209773/econ-2020-university-of-virginia in Economcs at University of Virginia.


Reviews for Principles of Economics Macroeconomics


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 09/21/15
Fina nce M a rket Exam Wilson 402 no lecture that Tuesday no calculator Includes today and Thursday all of part one on the syllabus Tuesday February 15 20H Review session Sunday Gilmer 130 25 1052 AM Or Econ Club tutoring Market for Loanable funds Capital Goods Tools that help us produce more goods or services in the future A means to an end Purpose help us produce goods GDP UP Without savings we would never get them Investment Spending on Capital Spending has to come before revenue investment must precede production Every Dollar Borrowed requires a dollar saved Good Savings Loans EX Buying a loan 500 R 6 Dollar Price 305 Price Interest Rate BuyersDemand Borrowers Sellers SaversLenders Price Interest Rates Supply of Loanable Funds Savings 1 Interest Rate Price a Reward for Saving Law of Supply price UP quantity supplied UP 2 Time Preferences Goods and services are more valuable the sooner they are delivered a Now is preferred to later People are impatient b You must pay to borrow 3 Consumer Smoothing People generally prefer smooth consumption patterns 4 Expected Inflation reduces the incentive to save because the dollars you get back are not worth as much a I UP Savings DOWN b Inflation reduces the real values of future funds Savings decline if more people retire than enter the workforce 0 quot ing4 Notes Page 1 3quotin m CALth b 3 fryrmle 3m 5 lliahs Demand 1 Interest Rate Price The Cost of Borrowing a Borrow iff expected return on investment Capital gt Cost of the loan interest rate Question How many investments have returns greater than 157 A few a few more Aot DOWN R UP Quantity Demanded 2 Capita Productivity When capital is more productive loan demand increases at all interest rated 3 Expected Inflation Increases the incentive to borrow Paying back with funds that aren39t worth as much a I UP Demand for Loans UP K Tiab D l swig n VM39JM Inusmu 56 I l quotbrium I S n mnstmwt Notes Page 2 Borrowers FinanCIal Markets are the bridge WW w WW w between Savers and Borrowers Elrmsw Governme Household Indirect finance gt 3 goes to firms through financial intermediary to the firm Banks Direct Financegt Savers and households went directly to the firm straight from saver to borrowerBonds and Stocks nt Bonds Direct between the Borrower and the Saver and IOU or a loan Contract eg buy a 10000 bond from entrepreneur at 8000 the 8000 price to 10000 sets the interest rate 25 Characteristics 1 Borrower 2 Date of Maturity When it is worth itself in cash 3 Face Value Value at maturity eg 10000 Two Principles 1 Dollar price dictates interest rate i Think of R as the rate of return on the initial dollars paid 2 The 3 price and R move opposite to each other gt By definition Default Risk 1 460m Will borrower Default 0 Depends on background check Firms Evaluated by Rating agencys like Moody39s and Paid W 25 i obfullv Standard and Poor39s Deterimines the interest rate High grade low interest rate CRUCIAL for firms VMoody39s SampP Description Examples Prime Toyota Walmart Intel VT Duke CocaCola A I39I39 Mcdonalds V ftBofAU Home Depot Kellog Sprint High Grade IE5 V V VBVBVBV V V VLJvJeVrV ragga 355 V V V V V V 22 V V a V V VV VN QH iVn vV gth VthVgFaZi JrVgg EJithiv f V V 39hngEIQVsViS ELJith iQJV39VVVV39VVVV39VVVV39 E52 V V VCVVCCVorVDVV 9qu ngJVeculthiveVoVrVDefaultVV VV V V Notes Page 3 Stocks Sell Ownership shares in the firm Eg Google 62422 gt Become Partial owner Not a fixed investment One of 320 million shares Market value 200 billion dollars Everything you need to know for the test Misc Secondary Markets Where bonds and stocks are traded after their initial sale NY stock exchange Important because securities with secondary markets are much more valuable Eg couldn39t resale the example bond from earlier Therefore marketable securities are more valuable Aids the borrowing entities Two special Debt Instruments 1 Us Treasury Bonds Funds the National Debt i Very low default risk i Used in Monetary Policy 2 Home Mortgages Loan Contract like a bond for HomeBuyers ii Mature in 30 years iii Difficult to rate Securitization Creation of a Financial Asset Security by combining other financial assets Like Bundling EG Mortgage Backed Securities Put lots of mortgages together M95 ma rcgogul WIquot 2 ob L 3 L01 L This creates a secondary Market which is good But by Diversifying risk they decided they were AAA sold all over the world to banks Eg Iceland bought a ton of them and tanked when the bubble burst Notes Page 4


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Jennifer McGill UCSF Med School

"Selling my MCAT study guides and notes has been a great source of side revenue while I'm in school. Some months I'm making over $500! Plus, it makes me happy knowing that I'm helping future med students with their MCAT."

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.