Financial System: It is a system where all the borrowers and lenders exchange their financial assets. Investment Spending: All those spending’s which are done on physical capital which means that only expenses that increases an economy’s level of physical capital is known as investment spending. Budget Balance: The budget is considered to be balanced when revenue collected from tax and expenditures made by the government are equal. When it is a deficit it is represented by a negative value, when it is a surplus it is represented by a positive value and in case of a balanced budget it is zero. Net Capital Inflow: It is the total amount of incoming of all the financial assets into a country which is then deducted from the total outgoing of financial assets out of a country.

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Chapter 10, Problem 14P

To determine

Concept Introduction:

Financial System: It is a system where all the borrowers and lenders exchange their financial assets.

Investment Spending: All those spending’s which are done on physical capital which means that only expenses that increases an economy’s level of physical capital is known as investment spending.

Budget Balance: The budget is considered to be balanced when revenue collected from tax and expenditures made by the government are equal. When it is a deficit it is represented by a negative value, when it is a surplus it is represented by a positive value and in case of a balanced budget it is zero.

Net Capital Inflow: It is the total amount of incoming of all the financial assets into a country which is then deducted from the total outgoing of financial assets out of a country.

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