Explain money

Question

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Answer 1

Question

Chapter 10, Problem 1RQ

To determine

Explain money

Expert Solution & Answer

Explanation of Solution

Money is the most liquid asset in the economy in which people regularly use to buy goods and services from other people. Even if the return from money is less than other financial assets, people still demand and hold money due to its higher liquidity. This means goods and service can easily transfer the used money. Otherwise, people have the choice to use barter or else, people have to suffer the cost of selling other assets to obtain money. Hence, anything that is generally accepted in payment for goods and services or in the repayment of debts is called money.

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Many countries have policies that limit how much interest a moneylender can charge on a loan. Do you think these limits are a good idea? Who benefits from the laws and who loses? What are likely to be the long-term effects of such laws? Tips: For part 2, you may think about how a low interest rate would affect the poor and those who owe huge debts. For part 3, you may think about how it would affect the profitability of the banking sector and the supply of lending (will lenders be encouraged to lend more?), and what implications it may have for "credit rationing" (being credit constrained).

Andover Bank and Lowell Bank each sell one-year certificates of deposit (CDs). The interest rates on these CDs are given in the table below for a three-year period. Bank Andover Bank Lowell Bank 2018 2% 5% 2019 2% 5% 2020 11% 5% Suppose you deposit $1,000 in a CD in each bank at the beginning of 2018. At the end of 2018, you take your $1,000 and any interest earned and invest it in a CD for the following year. You do this again at the end of 2019. At the end of 2020, the interest over this three-year period at Andover Bank is $ (Enter your response rounded to the nearest penny.)

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Answer 2

Question

Chapter 10, Problem 1RQ

To determine

Explain money

Expert Solution & Answer

Explanation of Solution

Money is the most liquid asset in the economy in which people regularly use to buy goods and services from other people. Even if the return from money is less than other financial assets, people still demand and hold money due to its higher liquidity. This means goods and service can easily transfer the used money. Otherwise, people have the choice to use barter or else, people have to suffer the cost of selling other assets to obtain money. Hence, anything that is generally accepted in payment for goods and services or in the repayment of debts is called money.

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Answer 3

Question

Chapter 10, Problem 1RQ

To determine

Explain money

Expert Solution & Answer

Explanation of Solution

Money is the most liquid asset in the economy in which people regularly use to buy goods and services from other people. Even if the return from money is less than other financial assets, people still demand and hold money due to its higher liquidity. This means goods and service can easily transfer the used money. Otherwise, people have the choice to use barter or else, people have to suffer the cost of selling other assets to obtain money. Hence, anything that is generally accepted in payment for goods and services or in the repayment of debts is called money.

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Answer 4

Question

Chapter 10, Problem 1RQ

To determine

Explain money

Expert Solution & Answer

Explanation of Solution

Money is the most liquid asset in the economy in which people regularly use to buy goods and services from other people. Even if the return from money is less than other financial assets, people still demand and hold money due to its higher liquidity. This means goods and service can easily transfer the used money. Otherwise, people have the choice to use barter or else, people have to suffer the cost of selling other assets to obtain money. Hence, anything that is generally accepted in payment for goods and services or in the repayment of debts is called money.

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Answer 5

Chapter 10, Problem 1RQ

To determine

Explain money

Expert Solution & Answer

Explanation of Solution

Money is the most liquid asset in the economy in which people regularly use to buy goods and services from other people. Even if the return from money is less than other financial assets, people still demand and hold money due to its higher liquidity. This means goods and service can easily transfer the used money. Otherwise, people have the choice to use barter or else, people have to suffer the cost of selling other assets to obtain money. Hence, anything that is generally accepted in payment for goods and services or in the repayment of debts is called money.

Answer 6

Chapter 10, Problem 1RQ

To determine

Explain money

Expert Solution & Answer

Explanation of Solution

Money is the most liquid asset in the economy in which people regularly use to buy goods and services from other people. Even if the return from money is less than other financial assets, people still demand and hold money due to its higher liquidity. This means goods and service can easily transfer the used money. Otherwise, people have the choice to use barter or else, people have to suffer the cost of selling other assets to obtain money. Hence, anything that is generally accepted in payment for goods and services or in the repayment of debts is called money.

Answer 7

Chapter 10, Problem 1RQ

To determine

Explain money

Answer 8

Expert Solution & Answer

Explanation of Solution

Money is the most liquid asset in the economy in which people regularly use to buy goods and services from other people. Even if the return from money is less than other financial assets, people still demand and hold money due to its higher liquidity. This means goods and service can easily transfer the used money. Otherwise, people have the choice to use barter or else, people have to suffer the cost of selling other assets to obtain money. Hence, anything that is generally accepted in payment for goods and services or in the repayment of debts is called money.