Question

• What role do financial markets and institutions play in U.S economic growth? Identify the types of financial intermediaries in the US economy and the primary assets of these intermediaries. In your own personal and retirement savings which financial intermediaries do you use? What assets do you use to save?
• In module 3 you researched the expected inflation rate, discuss how the expected future inflation rate will affect the market of loanable funds.

Answer 1

Financial markets play huge roles in Economics growth as they fairly represent the economic robustness of top organization and credit availability of financial institutions and also showcase the strength of the economy.
Financial intermediaries in the US like top banking institutions, hedge funds, private equity, and VC funds, sovereign funds, etc like Bank of America, KKR, Blackstone, Mirage Assets have been well known. Their assets include loans and reserves and contingency funds.
Consumers generally save in mutual funds, life insurance, provident funds, fixed deposits as financial instruments. Assets like interest on a second home, rent receipts are used for savings in the above instruments.
The future inflation rate is highly important for the supply of Loanable funds as if the inflation increases in future the US Fed shall increase its interest rates as the contractionary monetary policy which will thus reduce the supply of Loanable funds in the market.