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Money supply might cause increase in interest rates

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Reference no: EM133302155

Question 1. In a world without information costs and transaction costs, financial intermediaries would not exist." Is this statement true, false or uncertain? Explain your answer.

Question 2. In prison, cigarettes are sometimes used among inmates as a form of payment. How is it possible for cigarettes to solve the "double coincidence of wants" problem, even if a prisoner does not smoke? Explain functions of money.

Question 3. In Brazil, a country that underwent a rapid inflation before 1994, many transactions were conducted in US dollars than Brazil reals (the domestic currency). Why?

Question 4. Explain how an increase in money supply might cause an increase in interest rates?

Reference no: EM133302155

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