5.2

Financial institutions such as banks, mortgage companies and finance companies serve as intermediaries between those with a surplus versus those with a deficit creating a capital injection market.

1. What is the function of the financial market and its influence for the injection of capital. 2. What is the responsibility of the financial system in the demand for investment versus the supply of savings. 3. Using the concepts of real interest rate and expected rate of return, contrast the relationship between saving and capital investment. 4. Using macroeconomic theory, explain the relationship between the financial market and the economic growth of a country. 5. Explain the dynamic that is expected to occur between the different development policies in the injection of capital as instruments to promote the growth, sustainability and economic stability of a country.