Solution Manual for Money, Banking, Financial Markets & Institutions 2nd Edition by Michael Brandl

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Solution Manual for Money, Banking, Financial Markets & Institutions 2e Michael Brandl Chapter 2-24 CHAPTER 2: Money, Money Supply, and Interest 2-1 Section Review 1. What is the difference betw... een money and currency? When are they the same? Why might they be different? ANS: Money is anything generally accepted in exchange for goods & services. Currency is issued by a bank or the government, but currency is not necessarily money. They are the same when they are accepted in exchange for goods and services. Currencies can stop being money if people don’t accept them in exchange for goods and services. If a group of people stop using currency to get goods and services but instead use bananas, then the bananas are the money. 2. How many prices must a barter economy have if the economy has four goods? What if it has 400 goods? Explain why having a money in the second case is beneficial. ANS: 4 goods = 6 prices; 400 goods = 79,800 prices. Money allows us to specialize and reduce our search cost. Money allows us to reduce the number of stated prices we need. 3. You read a news story about a country that is suffering from rapid, ongoing increases in the cost of living. Which characteristic of money is being directly negatively impacted in that economy? [Show More]

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