Reference no: EM13901389
ATMs and credit cards
This problem examines the effect of the introduction of ATMs and credit cards on money demand. For simplicity, let's exam- ine a person's demand for money over a period of four days.
Suppose that before ATMs and credit cards, this person goes to the bank once at the beginning of each four-day period and withdraws from her savings account all the money she needs for four days. Assume that she needs $4 per day.
a. How much does this person withdraw each time she goes to the bank? Compute this person's money holdings for days 1 through 4 (in the morning, before she needs any of the money she withdraws).
b. What is the amount of money this person holds, on average? Suppose now that with the advent of ATMs, this person withdraws money once every two days.
c. Recompute your answer to part (a).
d. Recompute your answer to part (b).
Finally, with the advent of credit cards, this person pays for all her purchases using her card. She withdraws no money until the fourth day, when she withdraws the whole amount necessary to pay for her credit card purchases over the previous four days.
e. Recompute your answer to part (a).
f. Recompute your answer to part (b).
g. Based on your previous answers, what do you think has been the effect of ATMs and credit cards on money demand?
|
What is the current stance of monetary policy
: What is the current stance of monetary policy? (Note that policy will be described in terms of increasing or decreasing the federal funds rate as opposed to increasing or decreasing the money supply.)
|
|
How many additional units
: Assume that product Z is made of two units of A and four units of B. A is made of three units of C and two units of D. D is made of two units of E. Currently we have two units of Z, two units of A, two units of B, four units of C, four units of D, an..
|
|
Indicate which firm is likely to be apple computer
: Examine the following common-size income statements and indicate which firm is likely to be Apple Computer and which is likely to be Dell. Explain your reasoning.
|
|
Find the process capability index
: An electronic component has design specification limits of 215±25 mhz. Due to variation in the parts that goes into this component, the actual yield varies. A sample of 100 indicated a mean of 220 mhz and standard deviation of 7 mhz. Find the Process..
|
|
What is the amount of money this person holds, on average
: How much does this person withdraw each time she goes to the bank? Compute this person's money holdings for days 1 through 4 (in the morning, before she needs any of the money she withdraws).
|
|
Describe the context of an information system
: Describe the context of an information system and compare the range of requirements gathering techniques - This sets out the business case, and summarises other aspects of the project, including ‘needs and features', and other product requirements.
|
|
Find the upper and lower control limits for C-chart
: A random sample of 200 cars observed after paint jobs performed by robots indicated a total of 785 blemishes. Find the upper and lower control limits for a C-chart with alpha risk of 6% to monitor the number of blemishes per car. If a car has 10 blem..
|
|
What is the demand for central bank money
: Find the equilibrium interest rate by setting the demand for central bank money equal to the supply of central bank money.
|
|
Examine the which firm is likely to be american airlines
: Examine the financial ratios below and indicate which firm is likely to be American Airlines, Intel, and Disney. Explain your reasoning.
|