Complexities of the U.S. Financial System

Assignment 1: Complexities of the U.S. Financial System

Evita McKinley

Professor Karen Torres

FIN 100

November 3, 2013

Financial markets are markets where financial tools are bartered. They develop an open and regulated plan for business to acquire massive amounts of financial capital to amplify their businesses. Financial markets include bond markets, foreign exchange markets, the stock exchange and commodity (asset) markets. The Stock Market is a series of exchanges profitable businesses go to boost large amounts of funds to grow. The Bond Market is where a business goes to acquire large loans. The commodity market is where businesses counterbalance their risk of buying or selling natural resources for later use.

There is a positive connection between the development of the financial market and the growth of the economy. The U.S. financial markets impact the economy by well-developed easy functioning financial markets. When the financial markets run smoothly it provides for an efficient and healthy economy. Financial markets help to adequately direct the flow of savings and investment in the economy in ways that help facilitate the inflation of capital and the production of goods and services (Demirguc-Kunt & Levine, 2001). With a mixture of well-established financial markets and organizations on top of an assortment collection of economic commodities and instruments, accommodates the demands of borrowers and lenders – resulting in the helping the overall economy.

The rate of the U.S. employment exemplifies the growth and strength of the economy. The Jobs Report is reported monthly by the U.S. Bureau of Labor Statistics and accounts for about 80% of the workers who produce the entire gross domestic product for the United States. The statistic is used to help government policy makers and economists in figuring out the current state of the economy as well as predicting future levels of economic activity (Levitt, 2013). This basically means...