Financial Markets: Savings, supply/demand of funds (1 Viewer)

[vennmuch]

A prelim topic, I know but I'd really appreciate some help here.

Currently studying for an assessment test and need more info on
* Savings and determinants of the general level of savings
* The demand/supply of funds

It's worth 10 marks (both points) so I'm wondering what would be the roundabouts amount I should write? I'm thinking of dedicating no more than 20/60mins I have for the question.

Any input would be much appreciated! Thanks

 

[williamc]

A prelim topic, I know but I'd really appreciate some help here.

Currently studying for an assessment test and need more info on
* Savings and determinants of the general level of savings
* The demand/supply of funds

It's worth 10 marks (both points) so I'm wondering what would be the roundabouts amount I should write? I'm thinking of dedicating no more than 20/60mins I have for the question.

Any input would be much appreciated! Thanks

-Savings:

Made up of S public, and S private

S pub = (T - G)

S priv = Y disposable - C = (Y - T) - C

So talk about those variables. Tax, government spending, Income and consumption.
edit: and i guess thinks like the level of interest rates, unemployment and inflation rates would be some good macroeconomic variables to further discuss and draw implications

-Demand and supply of funds

Md = $YL(i)

The demand for money:
-increases in proportion to nominal income ($Y), and
- depends negatively on the interest rate (L(i)).
- the demand for currency also contributes for the Md
- oh and the demand for bank reserves influences the demand for money.

Equilibrium in financial markets requires that money supply be equal to money demand:
Ms = Md = $YL(i)

The supply for money:
-Can't remember if in the HSC you assume Ms is controlled by the RBA who hold it constant? I think you do. So yeah basically the demand for CB money (Hd) = H = Ms

edit edit: this may or may not relate to the HSC course at all i cant remember the syllabus im merely regurgitating information

 

[vennmuch]

Hey. Thanks for the input.

Much of the stuff mentioned is beyond the prelim level, I think however, it's been great to draw ideas from - and other points are quite relevant to the question.

Thanks so much, much appreciated.