Principles of Macro-Economics

Week 3 Discussion

 

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Your niece just started her college career with a major in economics. She is curious as to the interrelationship between the success of an economy and the financial markets, concepts, and financial institutions. Accordingly, she has developed a list of questions addressing these issues and has asked that you explain the ideas.

· What are the financial markets and what purposes do they serve?

· What are financial intermediaries? How do these intermediaries function in the economy?

· What is a federal government budget deficit? What is the national debt? How does a budget deficit affect the economy?

She is also curious about the time value of money concepts. Specifically, she has the following questions about these concepts:

· Why are consumers considered to be risk averse? What methods could be used to deal with risk?

· It has been said that a dollar received today is worth more than a dollar received tomorrow. What does this mean and what is the significance to the economy?

· What is the difference between the present value of a future sum of money and the future value of a present sum of money? What is the significance of these concepts to economics?

· If you deposited $1,000 in an account paying 6% interest compounded annually, how long would it take to double?

Deliverables:

· Prepare a 5-6 page Microsoft Word document that addresses the above-noted concerns and meets APA standards.

· Include a summary section in your report that contains 5-7 bullet points identifying your major findings or conclusions of your paper. 

· All submissions must be original and all resources must be properly acknowledged.