Chapter 26

Chapter 26's focus was on saving and investment, with how entrepreneurs and home business people would start their business in terms of money. Usually, not many people have enough money to start it on their own, and require them to get money from outside sources. There are multiple ways the money can be gotten, as there is a giant financial system in place to help with the idea of helping start ups in the country. Along with the many ways to get money, there are also many ways to pay it back, either with loans and interest, having a share of the stocks of the company, or not paying the principle but instead having to pay a certain amount forever. There are also financial intermediaries that help with the process of borrowing and paying, with banks being one of the main ones. Banks are useful for small stores that would have a hard time trying to raise money through bonds and the stock market. Usually bonds and stocks are bought from more familiar companies that the consumer can feel safe buying from them. The idea also of national saving being equal to investment comes from the analysis of a closed economy that the info can be used for a variety of economies. A government budget deficit can lead to declining growth and productivity and the nation, meaning GDP will also fall with them.