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Macroeconomics

13th Edition
Roger A. Arnold
Publisher: Cengage Learning
ISBN: 9781337617390

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BuyFindarrow_forward

Macroeconomics

13th Edition
Roger A. Arnold
Publisher: Cengage Learning
ISBN: 9781337617390
Chapter 12, Problem 14QP
Textbook Problem
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What is a financial system, and why would a country with a well-developed and fully functionally financial system be better off than a country without it?

To determine

Explain the financial system.

Explanation of Solution

Financial system in an economy can be defined as the set of markets and institutions to facilitate the exchange of assets and risks. This means that it transfers the money between the savers and borrowers. The operations and functions of a financial system in a well-developed country are much better than in a less developed country due to certain reasons as listed below:

  • A developed country provides more lending and borrowing opportunities, thereby expanding the financial system...

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Chapter 12 Solutions

Macroeconomics
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Ch. 12 - Suppose the value of the dollar declines relative...Ch. 12 - Does inflation, which is an increase in the price...Ch. 12 - People in a barter economy came up with the idea...Ch. 12 - A barter economy would have very few comedians. Do...Ch. 12 - Money makes trade easier. Would having a money...Ch. 12 - Explain why gold backing is not necessary to give...Ch. 12 - Money is a means of lowering the transaction costs...Ch. 12 - If you were on an island with 10 other people and...Ch. 12 - Can M1 fall as M2 rises? Can M1 rise without M2...Ch. 12 - Why isnt a credit card money?Ch. 12 - Define the following: a. Time deposit b. Money...Ch. 12 - Explain the process by which goldsmiths could...Ch. 12 - What is a financial system, and why would a...Ch. 12 - Identify each of the following as either an...Ch. 12 - Explain how financial intermediaries help to solve...Ch. 12 - Explain the difference between a banks loans and...Ch. 12 - Checkable deposits are 50 million, and required...Ch. 12 - The required reserve ratio is 9 percent, required...Ch. 12 - A banks assets are 90 million, and its liabilities...Ch. 12 - A bank currently has 100 million in checkable...Ch. 12 - Currency held outside banks is 400 billion,...Ch. 12 - If currency held outside banks is 200 billion and...Ch. 12 - Currency held outside banks is 100 billion, money...Ch. 12 - If checkable deposits are 20 million and the...Ch. 12 - If excess reserves are 2 million and required...Ch. 12 - If bank deposits at the Fed equal 40 million and...

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