We then move in and are able to differentiate smaller and smaller details. This idea goes a long ways tin explaining what we will be doing for much of the year. The study of how society allocates scarce resources. As you are aware, Economics usually is broken down in Microeconomics and Macro-economics. Macro is the study of big things, and this is no exception.
Finance is how funds are channeled through the economy.
With these easy definitions, we can now begin to look at the financial system. To do this we must first understand the long-range satellite picture. Thus much of what will follow is based on the idea that in equilbrium we must balance our spending and income. The financial system allows us to do that. As a result financial intermediaries came into existence.