Questions tagged [money]
any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context, or is easily converted to such a form. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, sometimes, a standard of deferred payment. Any item or verifiable record that fulfills these functions can be considered as money.
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What aspects of Money Creation in the Modern Economy are no longer correct
It has been suggested in some comments of another question that the well known paper Money Creation in the Modern Economy is no longer fully correct. What aspects of the paper would need to be ...
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Money Creation Confusion
I've been studying money creation recently and have come across some contradictory statements and different types of theories that I'd like to clear up.
The classical theory of money creation which ...
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What would happend if the total quantity of money get fixed?
I was wondering what would happend if the total amount of money get fixed in an scenario were there is not exchange of good and services between countries markets. I think maybe the fact that prices ...
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Why inflation doesn’t cool down economy by itself?
In the short run, wouldn’t you expect that an increase in (the rate of?) inflation leads to a decrease in GDP and thus inflation decreasing again. Like a self-correcting mechanism.
My motivation comes ...
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How can Real GDP increase while Money Supply remains fixed?
I'm studying the Money Market Graph with it's Money Demand and Money Supply curves. In the classical model they teach the Money Demand curve as sloping down to the right while the Money Supply curve ...
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Is money we make completely taken away by taxes?
In my opinion, any money we make will be completely taken away by taxes. Here is my logic.
When I earn some money (x), I have to give some as tax to the government. ...
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Is there a reason why a producer wouldn’t start selling at a high price and then keep lowering until they’ve sold everything?
I know ideally a producer is supposed to sell the equilibrium quantity for the equilibrium price. But is there a reason why a producer wouldn’t produce a quantity higher than the equilibrium quantity ...
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Does demand decrease when supply increases? [closed]
I’ve been reading about supply and demand and I don’t know if I’m misinterpreting, but it seems like what they’re saying is that when the quantity supplied of something increases, the quantity ...
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How to correctly calculate my real salary?
My salary is $900 after taxes. This is quite a large salary for my country. And when my parents found out about it, they said that I earn a lot.
But in my opinion it is not so, because in order to do ...
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In the Diamond-Dybvig model, why does the long-term investment not offer a liquidity risk premium?
In the basic version of this model (see link below), both the short-term asset (deposit) and the long-term investment (“technology”) are considered to be risk-free (that is, there is only one possible ...
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How exactly is money supply related to the price of goods and services?
I keep hearing that prices of goods and services are based on the money supply, so, for example, if there was only one good or service in the entire economy, that good or service would be worth the ...
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Am I correct, that these food stamps, as envisioned by me, do NOT serve as "medium of exchange"?
I imagine following situation: The government of some country issues and then distributes sets of food stamps to the poor. Like you get 1 food stamp that will allow you to get 1.5 kg of beef (no more, ...
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How can debt be larger than gdp? [closed]
government is taking debt because they spend it all at once and pay it over time so if you spend all at once there will be increase in gdp(multiple increase in gdp as money changes hands multiple ...
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What are these yearly spikes in the Russian Money Supply?
During a school project, I realized there are these consistent annual spikes in the Russian money supply chart. Any one know what these are?
https://tradingeconomics.com/russia/money-supply-m2
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How does lending “create” money? [duplicate]
I keep hearing that when banks loan money, it creates money and increases the money supply. But this confuses me. Wouldn’t the money have to have already been created in order for them to lend it in ...
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Is there any graph that shows how the gold and silver content decreased in roman coins?
I am looking for a graph of at least a table with data that would allow me to make a graph, showing how the gold/silver content was slowly removed from roman coins due to debasement of the currency.
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Q question on the components of the $M_1$ component of money supply
The $M_1$ component of the money supply is given by the sum of the value of money held by the public+the demand deposits in the country + other deposits(money of other government institutions held by ...
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Does printing more money necessarily lead to inflation?
Does printing more money necessarily lead to inflation? For instance, if the money supply increased, but the money just sat around and wasn’t distributed to people, would that still cause inflation? ...
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What exactly is the demand for money?
If the demand for money is the total amount of money that people want, then wouldn’t it just be infinite, considering people want as much money as they can get? I also don’t get why when people’s ...
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Question about quantity theory of money
I have a question regarding the infographic above. It says demand for money rises when money supply is low and demand for money reduces when money supply is high. Why exactly is that the case? Why ...
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Does money function like a systemic form of energy?
First let me say that I'm an MD with a background in science, not economics.
Recently, physicist Geoffrey West discovered that the same allometric scaling laws that have been known about in biology ...
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Contractionary monetary policy to tame inflation. Paradox?
One of the consequences caused by high inflation is lower economic growth.
The central bank, by contractionary monetary policy, increases interest rates in order to decrease aggregate demand and lower ...
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Is inflation the cause or just the consequence? [closed]
Inflation is usually referred as an issue to the economy and we analyze its consequences on income and economic growth.
My undestanding however is that the real issue is the negative shift in ...
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How did the first money owners get their money?
If certain people were the first money owners, then how did they get their money?
How could someone have paid the first money owners with money, if nobody before the first money owners had any money?
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Special Repo Rates below General Repo Rates
I've been hearing more and more about the divergence between "special" repo rates, where a specific security is posted as collateral, versus "general" collateral rates, where a ...
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Question about surplus/excess supply
My question is regarding the problem in the image above. As you can see, it says that if I have 300 tons priced at 150 dollars per ton, I should lower my price to the equilibrium price of 100 dollars ...
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Question about supply and demand?
I am reading a book on economics and it says that more supply equals less demand because people won’t pay a high price for things that are plentiful: "high supply will push prices down as ...
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What is meant by "faith" in the context of fiat currency?
I am reading a book on how money works and it has the following definition for fiat currency: "currency with value backed by faith in the government and economy." What does that mean exactly?...
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Can this transactions log become "money"?
TL;DR:
Mankind started trading in barter. Trade was simple so people could use word of mouth, their brain, or pen and paper, to find barter trade deals. However, as trading networks grew in size, ...
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Is the viability of a limited supply currency dependent on the equality or inequality of its distribution among potential users?
Presumably, the more unequal the distribution of a limited supply currency among potential users, the more advantage early accumulators have vs latecomers; as soon as the early accumulators begin to ...
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What is the connection between the money market and loanable funds market?
I am studying economics with Khan Academy and came across these 2 articles on
The money market and
The loanable funds market.
(LF = Loanable funds)
Now, clearly these 2 systems must be related, right? ...
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How much money is needed when creating a new hypotethical country?
If a new country is to come to existence as a thought experiment, what determines the amount of money that would be needed to bootstrap economic activities?
This question is more of a prodding ...
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Money-market model: Income rises, bond prices fall. But if income rises, saving increases — in bonds. So why does rising income lower bond prices?
According to the money market model that determines the equilibrium interest rate at which the demand for money in the economy equals the supply of money: when the money demand curve shifts right for ...
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Japan: Will the quantity of money per unit of output and the consumer price index show a huge divergence in the decades after 1980?
Milton Friedman, in one of his talks in 1980, showed a series of examples to illustrate his statement that inflation was a monetary phenomenon.
One of the examples he used was Japan. The following ...
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Does money need to fulfill all three functions (store of value, medium of exchange and unit of account) to be considered money?
It is often suggested the money fulfills several functions, including being a store of value, a medium of exchange and a unit of account.
However, I am not sure if the implication here is that money ...
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Why did money stop being backed by precious metals?
I am by no means someone educated in economy, but I like to learn about it.
I am trying to understand and grasp why FIAT money became so popular after Nixon 'ended' the Bretton Woods system. Why was ...
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With what money does a central bank buy gold?
When a Central Bank decides to increase its gold reserves, where does it get the money to pay for the gold from? How does this vary between countries with different strengths / policies on their ...
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Why did the Iranian Rial peak suddenly on 1 August 2014?
Search Iranian Rial and click on Max above the chart.
Iranian Rial to Pound Sterling:
Why did the Iranian Rial peak suddenly on August 1st 2014?
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What is sound money? Is it a well-defined concept within economics?
I see many broad definitions of what 'sound money' is. I also see it used as adjective.
Is there a universal definition, and is the concept ubiquitous within economics?
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Relative value of medieval coins and underlying metal
If I understand correctly, in early medieval Europe (and likely at other times and places), a fluctuation in metal price occasionally made it profitable to melt down silver or gold coins. This ...
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Does an increase in money demand lead to an increase in demand for loanable funds?
Does an increase in money demand lead to an increase in demand for loanable funds? If so, what is the mechanism behind the change?
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What is the name of this economics tale about the role of money?
I recall this simple tale that summarizes the role of money in economy.
I am looking for the original reference to its text, author and initial date of publication.
A foreign merchant reaches a ...
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What would happen in global bank run
Bank runs are self-amplifying. What would realistically happen if the entire earth would experience a simultaneous bank run?
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When a country is banned from using SWIFT, what alternative ways do banks within that country still have to transfer or receive money from abroad?
If Russia invades Ukraine one of the sanctions that the west might impose is banning the banks in Russia from the SWIFT network. I've watched a short video from a financial news channel that explains ...
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Why don’t sovereigns like Venezuela just immediately replace the currency in event of a hyperinflation
I am struggling to understand why governments, when faced with hyperinflation, often let it drag out for years rather than bite the bullet and replace the currency. Given that by that point the ...
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If no one knew about inflation, would inflation take place?
I’m not an economist and would like some insight into this thought experiment. If people, the news, social media, etc. suddenly stopped talking about inflation, would inflation still take place? ...
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Is there any good source that explains Chiense early experiment with paper money?
Historically China adopted paper money very early but during Ming Dynasty paper money was replaced by silver coins.
I would like to know why, is there any authoritative source that looks at this issue?...
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What is fiat currency and what are its ledgers?
How are these ledgers maintained and who does it? A practical example would be very helpful.
Thank You
Edit: I was learning about the history of money and ledgers. Because Bitcoin is a ledger in the ...
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Is it possible for a coin / token to act as long-term store of value and money at the same time?
I have recently watched a discussion about Bitcoin and its usage and one person argued that Bitcoin is a good way
I will make the question as focused as possible by narrowing the terms:
store of ...
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Is there any intuitive way to distinguish "sovereign money" and "bank money"?
From this link, I saw something relating to "sovereign money"
Sovereign money is legal tender, on hand or on account as well as on
mobile storage device, in the future maybe also in the ...
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