Chapter 26: Saving, Investment, and the Financial System

Mankiw introduces saving, investment, and the financial system in chapter 26. The financial system the group of institutions in the economy that help to match one person's saving with another person's investment; this is special characteristic of financial markets because they link current income with future purchasing power. The categories of financial institutions in the U.S. are financial markets (bond and stock markets) and financial intermediaries (banks and mutual funds).
The difference between a financial market and financial intermediary is that a financial market is an institution through which savers can directly provide funds to borrowers, whereas a financial intermediary is more indirect.

There was a lot of information in this chapter, and I thought it was kind of a weird transition from GDP + CPI (which were more closely related). However, I think the chapter did a good job emphasizing the importance of financial systems, which made the chapter more interesting.