Explain any two components of money supply flowing in an economy?

Q: What are six qualities of the ideal money?

A: Money is basically the trustworthy item or a verified thing which is used for the exchange of goods…

Q: What are the dangers of increasing the money supply too slowly? Too rapidly?

A: The money supply is a part of the monetary policy, a policy that increases the output and the…

Q: What are the three jobs of money?

A: Hi, thanks for the question. Since you posted multiple questions, we will answer for the first…

Q: Describe how each of the following can affect the money supply: (a) the central bank; (b) banks; and…

A: The money supply is the total amount of currency and other liquid assets in a country's economy on a…

Q: What does an increase in the money supply create?

A: The total amount of monetary assets circulating in an economy during a particular period of time is…

Q: Explain the classification of money into three parts prevailing in the economics

A: Actually money refers to a certain money value which is always inscribed on a written paper note or…

Q: Explain the differences between commodity money and fiat money. What are the major disadvantages of…

A: Money is something that is commonly accepted by the economy as a medium of exchange. Thus, money is…

Q: Briefly describe the dynamic function of Money

A: Sir Paul einzig broadly diffrentiated the function of money in two types :- (1) Static function of…

Q: according to the scale and substitution view of money, identify the factors that causes individual…

A: Money  People can get the things they need to survive thanks to money, which serves as a medium of…

Q: List the 3 functions of money.

A: STEP1 The main functions/purpose of money are: acting as medium of exchange, as a store of value,…

Q: Explain how the GDP and the interest rate are related to the transactions and asset demands for…

A: Demand for money: It means the total amount of money that is wanted to be held by the population of…

Q: What are the three functions of money? How does each function contribute to a more smoothly…

A: Money is an economic unit that is used as a medium of exchange for all the transactional purposes of…

Q: While the government prints currency, the rest of our money is created by the banks. How do banks…

A: The mechanism of money creation is the flow of bank-to - bank reserves, with each bank using surplus…

Q: COVID-19 has resulted in many persons being unable to work and has led to a decrease in economic…

A: A business cycle represents the upward and downward movement of economic activity across the long…

Q: Why is the money supply curve vertical?

A: The quantity theory of money refers to the theory of money which assumes that the quantity of money…

Q: What is money? Explain in terms of the functions of money. Define M1.

A: Money is the most important discovery in Modern Economy. All the economic activities revolve around…

Q: Why have some economists described money during ahyperinflation as a “hot potato” that is quickly…

A: Hyperinflation is a condition in which a country experiences a very high rate of inflation. For…

Q: Why are credit cards excluded from the equation for money supply?

A: The amount is the sum of the cash, coins and bank account balances in  circulation. The total amount…

Q: Explain the simplicity of money creation?

A: The cycle in which the financial system makes checkable deposits(CD) by loaning excess reserves. The…

Q: Explain with the aid of a graph, the impact of a cut in interest rate on the demand for money

A: Demand for Money There are three motives for holding money in the Keynesian framework and can now…

Q: What is a definition of money and list 4 factors that affect the demand for money?

A: Answer is given below

Q: Explain the role of reverse repo rate in controlling the money supply in economy

A: According to the given question Money supply basically refers to the amount of the total stock of…

Q: Draw a graph and explain what is the overall impact of lower interest rates on the money market

A: Money market is the market for short run fund . Where financial instruments which are traded is…

Q: What is the difference between temporary and permanent changes in money supply?

A: A MP is a policy adopted by the Central Bank or the government of the company to control the supply…

Q: Explain the opportunity cost of holding money and how does it relate to the interest rates

A: Introduction  An opportunity cost is the cost of foregone an alternatives if we choose any other…

Q: What is money? Explain the definition in terms of the functions of money?

A: Money is anything that is generally accepted by the people in the economy and used for the purchase…

Q: Please explain the difference between the transaction demand for money and the asset demand for…

A: Transaction demand of money refers to the demand for money that is cash and checking account balance…

Q: . What is the relationship between money demand and interest rates? What happens when the interest…

A: The entire quantity of money that an economy's population desires to hold is known as the demand for…

Q: Explain the concept of Commodity Money

A: Money is a liquid asset used to settle transactions. It works on the basis that its value is…

Q: is there any effects of digital money on money supply in the economy?

A: Digital money is a system used to pay or settle transactions through the Internet, and consists of a…

Q: What is money? What are the functions of money? What items may serve as money?

A: "Since you have asked the question with multiple subparts, we will solve the first three subparts…

Q: Can you describe the functions of money?

A: Money is something which is socially appropriate as a medium of exchange and can be transformed into…

Q: What is Fiat Money

A: The value of currency notes and coins is derived from the guarantee provided by the issuing…

Q: What problems an economy may face without money supply? How commercial banks create money in…

A: On a given date, the money supply is defined as the total amount of currency and other liquid assets…

Q: THREE (3) types of demand for money.

A:

Q: Can explain the money creation process and calculate size of the money multiplier by using the…

A: The money creation process refers to a process where the money supply in an economy is increased or…

Q: The demand curve for money is downward sloping because what?

A: The demand for money arises as people decide to hold their money in the form of cash or bank…

IS-LM-PC Analysis

The IS (Investment Saving), LM (Liquidity Preference- Money Supply), and PC (Philips Curve) is the model that looks at the dynamics of output and inflation. It takes into account the central bank policy decision to adjust the inflation and real interest rate in the economy. It enables the economist to weather to priorities between employment and inflation rate analyzing the model. It is a practice-driven approach adopted by economists worldwide.  

IS-LM Analysis

The term IS stands for Investment, Savings, and LM stands for Liquidity Preference, Money Supply. Therefore, the term IS-LM model is known as Investment Savings – Liquidity preference money Supply. This model was introduced by a Keynesian macroeconomic theory which shows the relationship between the economic goods market and loanable funds market or money market. In other words, it shows how the market for real goods interacts with the financial markets to strike a balance between the interest rate and total output in the macroeconomy. This particular model is designed in the form of a graphical representation of the Keynesian economic theory principle. The output and money are the two important factors in an economy.