Show the advantage and disadvantage of money, Macroeconomics

Assignment Help:

Q. Show the advantage and disadvantage of money?

Money has one significant advantage and one disadvantage compared to bonds: 

· Advantage: Money is more liquid than bonds. If most of your wealth is invested in bonds, firstyou should sell some of the bonds when you want to make a payment.

· Disadvantage: You receive interest payments on bonds though not on money. 

At 0% interest, there will be no reason to hold bonds and demand for money would be maximized. The higher the interest rate, the more you lose by holding money in place of bonds. So we would expect the demand for money to fall when R increases and this is the assumption in IS -LM model.


Related Discussions:- Show the advantage and disadvantage of money

Liberalisation and mode of entry, Liberalisation and Mode of Entry: Va...

Liberalisation and Mode of Entry: Various new forms of FDI flows have also emerged. Besides mergers and  joint ventures, transactional relationships are emerging such  as lice

Standard deck of playing cards, Suppose you are dealt two cards from a stan...

Suppose you are dealt two cards from a standard deck of playing cards. a) What is the probability of being dealt a pair of aces? b) There are 13 possible pairs possible (Aces throu

Determinants of long run prosperity rank, he questions posed are broad and ...

he questions posed are broad and open ended so be careful to allow yourself enough research and planning time. If you are completely on top of the material delivered in class, then

Important the industry effects, Firm effects are more important the industr...

Firm effects are more important the industry effects. What does this mean? Can you think of situations where this might not be true?

Major union wage settlement, Show the effects on the price level and real G...

Show the effects on the price level and real GDP of a major union wage settlement that significantly increases wages. Is this a supply shock, a demand shock, or both?

Fiscal restraint is required, If the AD excess is $300 billion and the MPC ...

If the AD excess is $300 billion and the MPC is 0.8 how much fiscal restraint is required? What does the "debt held by the public" mean?

Relate overnight interest rates targets with money supply, Relate Overnight...

Relate Overnight interest rates targets with money supply There are many ways to explain the important connection between the overnight interest rate target and the money suppl

Describe about capital, Q. Describe about Capital? By capital we charac...

Q. Describe about Capital? By capital we characteristically mean manufactured goods which are used to produce other services and goods though aren't used up in the production p

Summary of the phillips curves, Summary of the Phillips curves In neo-c...

Summary of the Phillips curves In neo-classical synthesis, augmented Phillips curve is known as the short-run Phillips curve. It is presumed to be stable as long as expectation

Open economy model, Use a diagram of the open economy model (e.g. fig 32.4 ...

Use a diagram of the open economy model (e.g. fig 32.4 from the text) to illustrate and explain the effect of the following event on the market for loanable funds, the level of net

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd