Final answer:
The three sources of global investment funds are governments, corporations, and individuals. Investment decisions must take into account risk and return, and governments and corporations raise funds through various means, including issuing bonds and selling stock. The U.S. economy's financial capital comes from domestic savings and foreign investment, as encapsulated by the national saving and investment identity.
Step-by-step explanation:
The three sources of global investment funds typically include governments, corporations, and individuals. When considering investment in financial assets, it is essential for investors to identify their goals and carefully analyze the potential risk and return. Governments and corporations may raise funds by issuing bonds, reinvesting profits, borrowing through banks or bonds, and selling stock. Additionally, the global flow of financial capital does not just relate to government debt, but also includes investments from private investors in various forms such as real estate, companies, and financial assets.
In the context of the U.S. economy, the main sources for the supply of financial capital are savings by individuals and firms, and the inflow from foreign investors, which is often reflected in the trade deficit. The demand for financial capital arises from private sector investment and government borrowing. This relationship can be expressed using the national saving and investment identity, which is an important concept in understanding economic funding streams.