MONEY SUPPLY CREATION

32問 • 2年前

問題一覧

It a broad term that refers to any financial instrument that can fulfil the functions of money. These financial instruments together are collectively referred to as money supply of an economy.

MONEY

Is the amount of money that exists in the economy at any given time. It is the amount of financial instruments within a specific economy available for purchasing goods or services.

MONEY SUPPLY

banknotes and coins

CURRENCY

The balance held in checking accounts and savings accounts.

BANK MONEY

Usually forms by far the largest part of the money supply.

BANK MONEY

Is highly liquid (immediately available) . It consists of currency in circulation (coins and bills) plus demand deposits (checking accounts) and traveler’s checks. These are otherwise called general purpose money or narrow money.

M1 MONEY SUPPLY

Includes M1 money plus less immediate forms of money such as savings accounts, money market mutual accounts, money market deposit accounts, repurchase agreements and small denomination time deposits.

M2 MONEY SUPPLY

Includes M2 plus larger time deposits and similar institutional accounts (promissory notes, securities). These are otherwise termed as near money. Also, these are called domestic liquidity.

M3 MONEY SUPPLY

The total amount of all existing commodities that can be bought at a given time, for which a unit of money would exchange.

VALUE OF MONEY

Relative concept which articulates the association amidst a unit of money and the goods and services that can be acquired with it.

VALUE OF MONEY

Means its purchasing power, its capacity to command goods in exchange for itself. Money as we know is not needed for its own sake but for the goods.

VALUE OF MONEY

The value of money expected in a given amount of interest earned over a given amount of time.

TIME VALUE OF MONEY

Exactly the amount of money that you have at the present time.

PRESENT VALUE

Amount of money that you will have at a given point in the future.

FUTURE VALUE

Give the 3 sources of value of money

GOVERNMENT, PURCHASING POWER VALUE, EXCHANGE VALUE

It is the number of goods/services that can be purchased with a unit of currency.

PURCHASING POWER VALUE

Money is needed to facilitate the normal transactions of the business, that is, to carry out its purchases and sales activities. The more transactions a person or a business has, the more money is to be demanded.

TRANSACTION MOTIVE

Money may be held beyond its normal operating requirement level in order to provide a buffer against contingencies such as unexpected slowdown in accounts receivable collection, strike, or increase in cash needs beyond management’s original projections. In other words, people hold money as insurance against unexpected needs/problems.

PRECAUTIONARY MOTIVE

Money is held ready for profit-making or investment opportunities that may come up such as a block of raw materials inventory offered at discounted prices or a merger proposal.

SPECULATIVE MOTIVE

A company may be required by a bank to maintain a certain compensating balance in its demand deposit account as a condition of a loan extended to it.

CONTRACTUAL MOTIVE

States that there is a direct relationship between the quantity of money in an economy and the level of prices of goods and services sold.

QUANTITY THEORY OF MONEY

According to this theory, if the amount of money in an economy doubles, price levels also double, causing inflation (the percentage rate at which the level of prices is rising in an economy).

QUANTITY THEORY OF MONEY

States that the price level is a function of the supply of money. This explains that money supply has a direct proportional relationship with the price level. As the money supply increases, the price increases with no change in the quantity.

QUANTITY THEORY OF MONEY

Refers to the average number of times per year each peso is used to transact an exchange. It is built on the principle of “equation of exchange” . This states that the quantity of money times its velocity equals the quantity of the goods and services produced times their prices.

VELOCITY OF MONEY

It is further understood that total spending is equal to the amount of money x velocity of circulation.

EQUATION OF EXCHANGE

What is the equation for the Velocity of Money?

MV=PQ

What does variable M denotes?

MONEY SUPPLY

What does variable V denotes?

VELOCITY OF CIRCULATION

What does variable P denotes?

AVERAGE PRICE LEVEL

What does variable Q denotes?

QUANTITY OF GOODS AND SERVICES

This theory emphasizes that changes in the money supply can influence the price level only indirectly by causing changes in the volume of total expenditure.

INCOME THEORY OF MONEY

Accoring to this theory it is the money income and the volume of expenditure, and not the supply of money (as in the quantity theory of money), which is a strategic factor influencing the prices as well as the output level.

INCOME THEORY OF MONEY

WORLD BANK AND IMF (FROM WEB)

Honey Joy T. Dallego · 21問 · 2年前

WORLD BANK AND IMF (FROM WEB)