Financial Services Fundamentals Study Guide 2

Learning Outcomes

  • You have distinguished between stocks and flows and given examples of how net flows cause changes in stocks;
  • You have seen that measuring economic and financial data is important for purposes of comparison but you must distinguish between real and money values;
  • You have studied the money stock and seen how it changes,
  • Inflation is measured by a price index and is seen as an economic problem. It is UK government policy to keep inflation under control and this is done by the Bank of England setting interest rates,
  • Changes in inflation and in interest rates have general economic effects. It is important to bear in mind the importance of real statistics such as the national product and to link these with financial data,
  • The financial system is a very important part of the UK economy and makes a great contribution to employment and to the balance of payments,