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Q. What are the main functions of money?
Answer: Money serves generally three important functions that are a unit of account, a medium of exchange and a store of value.
As medium of exchange money evade going back to a barter economy with the enormous search costs connected with it. Like a unit of account the use of money economizes on the number of prices an individual faces. Consider a financial system with N goods then one need only (N- 1) prices. Like a store of value the use of money in general ensures that you can transfer wealth between periods.
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Q. To answer the following question, please refer to the figure below. Concentrating only at the lower left quadrant, discuss the relationship between the U.S. real money supply a
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Q. Explain why the distinction between debt and equity finance is useful in analyzing the response of developing countries to unforeseen events such as recession or terms of trade
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