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general and selective credit controlthese are imposed with the full apparatus of the law or informally using specific instructions to banks and other
direct control and moral suasionwithout actually using the above weapons the central bank can attempt simply to use moral suasion to persuade the
supplementary reserve requirementsspecial depositif the central bank feels that there is too much money in circulation it can in addition require
variable reserve requirement cash and liquidity ratiosthe central bank controls the creation of credit by commercial banks by dictating cash and
discount rate bank ratethis is the rate on central bank advances and is also called official discount rate or minimum lending rate when
open market operationsthe central bank holds government securities it can sell some of these or buy more on the open market buying or selling
the central bankthese are usually owned and operated by governments and their functions arei governments banker governments
the banking systemconsists of all those institutions which determine the supply of money the main element of the banking system is the commercial
determinants of the money supplytwo extreme situations are imaginable in the first situation the money supply can be determined at exactly the
the supply of moneyrefers to the total amount of money in the economymost countries of the world have two measures of the money stock - broad money
demand for money the demand for money is a more difficult concept than the demand for goods and services it refers to the desire to hold ones
the quantity theory of moneyin the 17th century it was noticed that there was a connection between the quantity of money and the general level of
the determination of the value money since money is primarily a medium of exchange the value of money means what money will buy if at one time
characteristics of moneyover time therefore it became clear that for an item to act as money it must possess the following characteristics
paper moneydue to the risk of theft members of the public who owned such metal money would deposit them for safe keeping with goldsmiths and other
the historical development of moneyfor the early forms of money the intrinsic value of the commodities provided the basis for general
disadvantages of barter trade it is impossible to barter unless a has what b wants and a wants what b has this is called double coincidence of wants
the nature and function of moneythe development of money was necessitated by specialization and exchange money was needed to overcome the
causesthere are a number of explanations of the business cycle but changes in the level of investment seem to be the most likely in the simplest
open economynone of the three economies considered so far are engaged in trade with foreign countries such economies are often referred to as
real and nominal measuresoutput expenditure and income can be valued at current market price in which case we speak for example of money or nominal
disposable incomethis is the income which households actually have available to spend or to save to calculate disposal income which is indicated
transfer paymentsare any payments made to households by the government that are not made in return for the services of factors of production ie there
the governed economythe governed economy contains central authorities often simply called the government - who levy taxes on firms and households and
the frugal economyin the frugal economy households and firms look to the future and as a result undertake both saving and investmentsavingsaving is