1. Saving, Investment,
and the Financial System
Chapter 13
By: Kyeong Whan Park (Parker)
Liwei Zhu
Su Yan
Yutian Wu
Jeremy Johnson

2. Understanding difference between saving,
investment, and the financial system

3. Financial Institutions
• Financial System- the collection of accounting processes and procedures that allow a
business to keep accurate financial records, monitor accounts, prevent fraud and mistakes,
and catch any discrepancies.
• Helps coordinate savers and borrowers of various financial institutions
• Financial Markets- any marketplace where buyers and sellers participate in the trade of
assets such as equities, bonds, currencies and derivatives.
• Examples- the stock market, the bond market, the real estate market.
• Financial Intermediaries- financial institutions through which savers can indirectly provide
funds to borrowers.
• Examples- Insurance Companies, Financial Advisors, Credit Union, Mutual/Investment
trusts
• Benefits- Lower search costs, Economies, Spreading risk, and Convenience of Amounts.

4. Different Kinds Of Saving
• Private Saving- the amount of income that households have left after
paying their taxes and paying for their consumption.
• Private Savings= Y-T-C
• Public Saving- the amount of tax revenue that the government has left
after paying for its spending.
• Public Savings= T-G
• National Saving- the sum of a nation’s public and private savings.
• National Savings= Private Savings + Public Savings

5. Saving and investment
• Different type of Investments- ownership, lending and cash
equivalents.
• Examples of investments- Retirements and starting a business
• Savings examples - bank account

6. Budget deficits and surpluses
• Budget Surplus- a period when income or receipts exceed outlays or
expenditures.
• Budget deficit- an excess of government spending over tax revenue
• Budget Deficit= Government's Total Expenditures- Government’s Total
Income
• United States Federal Government's total income for the fiscal year 2012 is
$2.469 trillion while its corresponding expenditures amount to $3.796 trillion.
• This gives us a budget deficit of $1.327 trillion ($3.796 trillion of expenditures
minus $2.469 trillion of total income).

7. The market for loanable funds
Definition：the market in which those who
want to save supply funds and those who want
to borrow to invest demand funds.

8. The market for loanable funds
we assume that the economy has only one financial market
• All savers go to this market to deposit their saving
• all borrowers go to this market to take out their loans.
• there is one interest rate, which is both the return to
saving and the cost of borrowing

9. The market for loanable funds
The supply of loanable funds comes from people who have some
extra income they want to save and lend out. This lending can occur
directly, such as when a household buys a bond from a firm, or it
can occur indirectly, such as when a household makes a deposit in a
bank, which in turn uses the funds to make loans. In both
cases, saving is the source of the supply of loanable funds.

10. The market for loanable funds
The demand for loanable funds comes from households and
firms who wish to borrow to make investments. This demand
includes families taking out mortgages to buy new homes. It
also includes firms borrowing to buy new equipment or build
factories. In both cases, investment is the source of the
demand for loanable funds.

11. The market for loanable funds
The slope of the supply and demand curve

12. The Market for Loanable Funds
The interest rate in the economy adjusts to balance the supply
and demand for loanable funds.

13. Policy 1: Saving Incentives
• Saving Incentives Increase the Supply of Loanable
Funds

14. Policy 2: Investment Incentives
• Investment Incentives Increase the Demand for
Loanable Funds

16. Browse & Compare Savings Accounts
Description Monthly
Maintenance
Fee
Requirement to Waive the Fee Minimum
Opening
Deposit
Platinum
Select
Money
Market
Savings
An exclusive savings account with discounts and
more for top-tier customers. Must have a
Platinum Checking Package to apply.
$0 None $25
Package
Money
Market
Savings
Enjoy competitive rates and other benefits when
you team up your Silver or Gold Checking
Package with a Package Money Market Savings
account.
$0 None $25
Standard
Savings
Account
Our FDIC-insured Standard Savings account
features competitive rates and is ideal for first-
time savers and those with low account balances.3
$4 $300 minimum daily ledger
balance1 OR $1,000 average
monthly collected balance2
$25

17. Goal
Savings
Account
Get yourself on the fast track with
automatic transfers from your U.S.
Bank checking account. Goal Savings
is FDIC-insured and gives you an easy
way to save.
$0 None $0, with a minimum $25
automatic monthly
transfer from a U.S.
Bank personal checking
account, per statement
cycle4
View
Rate
Money
Market
Account
Our standard Money Market account is
FDIC-insured and provides
competitive interest rates and a low
minimum balance requirement. Plus,
you'll always have easy access to your
funds when you need them.
$10 $1,000 minimum
daily ledger
balance1
OR $2,500
average monthly
collected balance2
$100 View
Rate
Elite
Money
Market
Account
When you keep your balances higher
with our Elite Money Market account,
you're rewarded with a higher rate of
return.
$10 $10,000 daily
minimum ledger
balance1
$100 View
Rate

18. Star Savers Club Teach your kids to learn good money management
skills. Our FDIC-insured Star Savers Club account is
designed for children 17 and under.3
$0 None $25 Vie
Ra
Retirement Money
Market Account
Remove
Use this account to aid with your retirement plan. $0 None $100 or $25
automatic monthly
deposit
Vie
Ra

21. Intermountain Gas and U.S. Bank give time and
money to Paint the Town

22. The Financial Of US Bank
• Stock information

23. Financial information of US bank

25. References
• - Staff, I. (2016, October 24). Intermountain gas and U.S. Bank give time and money to paint the town. Retrieved from
http://idahobusinessreview.com/2016/10/24/intermountain-gas-and-u-s-bank-give-time-and-money-to-paint-the-town/
• - Product comparison. (2016). Retrieved from
https://www.usbank.com/ICWeb/productComparison.html?productCode=SAV,REA&icid=OTHI_17642&WT.mc_id=r
17642&original_ref=https%3A%2F%2Fwww%2Eusbank%2Ecom%2Fsavings%2F
• - Stocks, Rating, S., Cap, M., Type, S., Funds, I. M., Style, I., … data, O. reliable. Shareholders major USB US
Bancorp including fund and institutional. Retrieved from http://investors.morningstar.com/ownership/shareholders-
major.html?t=USB
• - Us bank stock. Retrieved from https://www.google.com/search?q=us%20bank%20stock&rct=j
• - Retrieved From https://www.usbank.com/en/annual_report/investor/resources/doc/USBank_AR14.pdf