IMU 602 CHAPTER 11

How does Open Economy works?

• It involves 3 sectors of economy: Household, Firms, Foreign Sector

• It involves 4 economic sectors: Household, Firms, Govt and Import & Export

• There are Product Market, Factor Market and Financial Market

• Chanelling of investible funds from surplus units to deficit units

What are the main components of Financial System?

• Financial Instruments

• Financial Institution

• Financial agent

• Financial Market

These are examples of financial asset, except:

• Lembaga Tabung Haji

• Loans

• Deposit

• Pension funds

What does it meant by "an arrangement in which lender gives money or property to a borrower, and the borrower agrees to return the property or repay the money, usually along with interest, at some future points in time" ?

List down ALL 7 functions of Financial System below.