Chapter 14, Problem 17AA

To determine

To ascertain:The difference between the money and the near money.

Explanation of Solution

Money is a matter of economic activity that functions in an economy and function as a way of exchange for the purpose of the transaction. Throughout financial economics, near money is a term that describes extremely volatile non-cash assets that are rapidly converted into cash.

Near money is financial economics describing highly liquid non-cash capital assets that can be transformed quickly into cash. Savings deposits, deposit certificates, money market accounts, foreign currencies, and bills of Treasury are near-money assets example.

Some of the distinct features of these two type of money are as follows:

Money is a form of bank coins, currency notes, and demand deposits. Money has liquidity of 100 percent. Money is not an asset that yields income.

Whereas near money includes financial assets such as time deposits, bonds, bill of exchange shares, etc. The liquidity of near-money is 100 percent lacking. Earnings yielding assets are near-money assets.

Economics Concept Introduction

Introduction:Money is also defined in the terms of the three roles or services that it offers. Money also functions as a medium of exchange, as a value shop, and as a unit of account. The most significant role of money is to promote transactions as a means of trade.