Flow of Funds

Flowchart nodes

• Funds available for loans

• Supply of Funds / Loaning

• Demand for funds / Borrowing

• Individuals Saving up for future needs

• Businesses If profits strong and no immediate need for funds Interest rates is at level where maintaining deposit funds is likely more lucrative than invest in expanding

• Governments When surplus exists in budget (i.e. revenue > expenditure)

• Individuals Home loans - mortgage Personal loans (holiday, uni, car) Credit card

• Governments Raise level of economic activity (borrow --> increase spending / tax cuts) Expenditure > Revenue Pay off existing debt Maintain positive financial balance

• Businesses Starting up business Expanding business Invest in research and deveopment Overcome downturns in cash flow

• International Sector Australia's low saving rates --> overseas savings --> finance domestic consumption + investment --> recorded as foreign liability and repaid Foreign debt grown ($976bil in June 2015)