Economics of Money, Banking and Financial Markets - With Access
11th Edition
ISBN: 9780134151809
Author: Mishkin
Publisher: PEARSON
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Question
Chapter 10, Problem 1Q
To determine
The way in which deposit insurance and other types of government safety nets are important to the health of the economy.
Expert Solution & Answer
Explanation of Solution
Deposit insurance and other types of government safety nets are important to the health of the economy for many reasons. Deposit insurance is the fund to protect the deposits of the individuals in an economy from the loss due to the failure of a financial institution. The safer is the people’s money in an economy, the more they will be confident about savings which will increase the number of deposits and investments in an economy.
Government safety nets are made for various individuals in an economy to protect them from various kinds of losses. More safety nets would mean much safer people in an economy, which will increase the growth and the investments opportunity in an economy. So, it is important for the health of the economy.
Economics Concept Introduction
Introduction:
Deposit insurance refers to the funds devoted to protecting the deposits of individuals in the financial institutions by the government authority or federal deposit.
Insurance is that amount that is kept aside to repay the money of deposits by various individuals at the time of failure of a financial institution.
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Responsd to Luis Rodriguez
1800 tons of pomegranates a year is a lot of sweetness!
So, you can get 71 Afghanis for $1? How cool. Does that mean you can buy a lot of stuff in Afghanistan for only $1? How do you know that your purchasing power in Afghanistan is stronger than in the United States?
Yes, with an exchange rate of 71 Afghan Afghani for 1 US dollar, you can buy many things in Afghanistan for just $1. However, purchasing power isn't solely determined by the exchange rate. It also depends on the cost of goods and services in each country. For example, if a meal in Afghanistan costs 200 Afghanis, you would need about $2.82 to buy that meal in US dollars (since 200 Afghanis divided by 71 Afghanis per dollar equals approximately $2.82). So, while the exchange rate allows you to get more Afghanis for your dollars, you also need to consider how much things cost in Afghanistan.
Now that the world seems to like Afghani stuff and is buying more of it, does that mean your…
Chapter 10 Solutions
Economics of Money, Banking and Financial Markets - With Access
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