Explain money

Question

Want to see more full solutions like this?

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.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

After staying virtually flat for about a year and a half, the average lending rate of banks has started to show signs of decline in April after the Bank of Ghana reduced the monetary policy rate the month before. The Summary of Economic and Financial Data (May 2020) published by the Bank of Ghana has shown that average lending rate has finally moved out of its comfort zone to a step downward. Prior to recording 22.38 percent in April, the average lending rate has since the past 17 months (December 2018) not come below 23%.How would banks benefit when interest rates decrease?

A group of college friends decide to start their own bank, LSU Community Bank, in rural Pennsylvania. In order to get started they put in a total of $10 million of their own money and borrow $40 million from a venture debt lender. (This is known as venture debt lending.) They accept $160 million in deposits from households and businesses in the community, and, in turn, make $90 million in loans. They also purchase $95 million of mortgage-backed securities and keep the remainder of their assets as reserves at the Philadelphia Federal Reserve District Bank. a. Show LSU Community Bank's balance sheet. b. What is LSU Community Bank's reserve-deposit ratio? c. What is LSU Community Bank's asset to equity ratio?

A group of college friends decide to start their own bank, LSU Community Bank, in rural Pennsylvania. In order to get started they put in a total of $10 million of their own money and borrow $40 million from a venture debt lender. (This is known as venture debt lending.) They accept $ 160 million in deposits from households and businesses in the community, and, in turn, make $ 90 million in loans. They also purchase $ 95 million of mortgage-backed securities and keep the remainder of their assets as reserves at the Philadelphia Federal Reserve District Bank. a. Show LSU Community Bank's balance sheet. b. What is LSU Community Bank's reserve-deposit ratio? C. What is LSU Community Bank's asset to equity ratio? d. Suppose the housing market tanks and the market value of the bank's mortgage-backed securities falls by 10%. i. Show LSU Community Bank's new balance sheet. ii. By what percentage does the value of the bank's assets fall? iii. By what percentage does the value of the bank's…

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.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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.