Which best explains the difference between fiat money and commodity money quizlet?

Inhaltsverzeichnis Show

Which best explains the difference between fiat money and commodity money?
What is the difference between fiat and commodity money quizlet?
What is the difference between commodity money and commodity based money?
What type of commodity money is fiat money quizlet?

Principles of Economics

8th EditionN. Gregory Mankiw

1,335 solutions

Century 21 Accounting: General Journal

11th EditionClaudia Bienias Gilbertson, Debra Gentene, Mark W Lehman

1,012 solutions

Introductory Business Statistics

1st EditionAlexander Holmes, Barbara Illowsky, Susan Dean

2,174 solutions

Statistical Techniques in Business and Economics

15th EditionDouglas A. Lind, Samuel A. Wathen, William G. Marchal

1,236 solutions

Fundamentals of Engineering Economic Analysis

1st EditionDavid Besanko, Mark Shanley, Scott Schaefer

215 solutions

Principles of Economics

8th EditionN. Gregory Mankiw

1,335 solutions

Statistical Techniques in Business and Economics

15th EditionDouglas A. Lind, Samuel A. Wathen, William G. Marchal

1,236 solutions

Century 21 Accounting: General Journal

11th EditionClaudia Bienias Gilbertson, Debra Gentene, Mark W Lehman

1,012 solutions

Suppose banks keep no excess reserves and that all banks are currently meeting the reserve requirement. The Federal Reserve then makes an open market purchase of $16 , 000

from Bank 1.
Use the T-account below to show the result of this transaction for Bank 1, assuming Bank 1 keeps no excess reserves after the transaction. (Remember T-accounts show the changes to a bank's balance sheet.)

The simple deposit multiplier is used to determine the total increase in deposits and the money supply:

total increase in deposits = change in bank reserves/rr

The higher the required reserve ratio, the smaller is the simple deposit multiplier.
When RR = 10%, the multiplier is 10 and the total increase in deposits is $10,000. 10 x 1k
The total increase in the money supply is $10,000minus
$1,000equals$9,000.

This process also works in reverse: when banks lose reserves, they
reduce their loans and the money supply contracts.

Assume all of Bank 1's loans of $16,000

are spent by the borrowers and then deposited into Bank 2.
Use the T-account below to show the result of this transaction for Bank 2, assuming Bank 2 keeps no excess reserves and the reserve requirement is 9
%.
(Remember T-accounts show the changes to a bank's balance sheet.)

Assume all of Bank 2's loans of $14 comma 560

are spent by the borrowers and then deposited into Bank 3.
Use the T-account below to show the result of this transaction for Bank 3, assuming Bank 3 keeps no excess reserves and the reserve requirement is 9
%.
(Remember T-accounts show the changes to a bank's balance sheet.)

Principles of Economics

8th EditionN. Gregory Mankiw

1,335 solutions

Century 21 Accounting: General Journal

11th EditionClaudia Bienias Gilbertson, Debra Gentene, Mark W Lehman

1,012 solutions

Essentials of Investments

9th EditionAlan J. Marcus, Alex Kane, Zvi Bodie

689 solutions

Statistics for Business and Economics

13th EditionDavid R. Anderson, Dennis J. Sweeney, James J Cochran, Jeffrey D. Camm, Thomas A. Williams

1,692 solutions

Which best explains the difference between fiat money and commodity money?

The value of fiat money is based largely on public faith in the issuer. Commodity money's value, on the other hand, is based on the material it was manufactured with, such as gold or silver. Fiat money, therefore, does not have intrinsic value, while commodity money often does.

What is the difference between fiat and commodity money quizlet?

What is the difference between commodity money and fiat money? Commodity money involves the use of an actual good in place of money (gold coin, tobacco). Fiat money has no other value than as a medium for exchange; value comes from government (paper money).

What is the difference between commodity money and commodity based money?

While commodity money uses the commodity itself as currency directly, commodity-backed money is money that can be exchanged on demand for a specific commodity.

What type of commodity money is fiat money quizlet?

Commodity money is money with intrinsic value, like gold, which can be used for purposes other than as a medium of exchange. Fiat money is money without intrinsic value; it his no value other than its use as a medium of exchange. Our economy uses fiat money.