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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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Why can't Russian CB influence on dollar?

I read in Russian article that Russian CB can't influence on dollar. CB can't depreciate dollar. CB can influence on rate of RUB only. But if there is demand on USD or RUB then why can't CB influence ...
Mike_bb's user avatar
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What is liquidity of dollars?

I read Russian article about exported inflation and it was written there about liquidity of dollars: In order to reduce national debt of the USA and to stimulate economic growth government of USA ...
Mike_bb's user avatar
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Why must goods in the country will be purchased with the entire money supply in the country?

In russian books it's written that there is balance between commodities and money. And this balance guarantees that all goods in the country will be purchased with the entire money supply in the ...
Mike_bb's user avatar
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-4 votes
1 answer
260 views

Money creation - why do we need deposits and why do banks give out money? [duplicate]

Currently studying elementary economics but there's this one concept that I'm struggling to wrap my head around at the moment: money creation. The way I understand it, banks can create money "out ...
l337n00b's user avatar
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1 answer
85 views

Is non-monetary economy formally possible?

As an outsider I have a few questions non-monetary economy. Is it principally and theoretically possible to remove money from economy? If so does that help with stopping economical inequality, where ...
Bastam Tajik's user avatar
1 vote
1 answer
51 views

Is there a diagram outlining the life of a dollar?

I would like to understand the economic system concretely. My reading leads quickly into graphs and theory, which is interesting but not what I'm looking for. Instead, I imagine I should be able to ...
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can the amount of cash reserve ratio reserve bank of india gives back to banks or not

one instrument we have learnt like Cash reserve ratio . supoose crr is 4% and one person deposit 100 rupee in bank. now the crr is 4 it means out of 100 rupees 4 will go to rbi .my question is . can ...
Dheeraj   singh 's user avatar
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2 answers
340 views

Why is the barter economy predating money taught when it never existed?

As described here, and from what I remember from economics class (this may sound anecdotal, but I think it's common knowledge, correct me if I'm wrong), a barter economy is said to predate money. But ...
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When a currency is redenominated, do people with a lot of it lose?

When a currency is redenominated, for example 1,000,000 = 1, which is done in response to hyperinflation due to government abuse of moneyprinting, do the people with a lot of the currency lose? For ...
economics's user avatar
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1 answer
190 views

The number of relative prices without money

So recently I am reading a lot of monetary literature and this comes up when they talk about the unit of account function of money: $$(n / 2)(n-1)$$ Can we prove this or where does it come from and ...
BlankerHans's user avatar
5 votes
1 answer
486 views

The paradox of IOU

If money is just an IOU then the initial creation of money contradicts this assumption, doesn't it? A central bank doesn't owe money to any other entity (national central banks or commercial banks) ...
BlankerHans's user avatar
2 votes
1 answer
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Appropriate niveau of econometric model for bachelor thesis

I am writing my bachelorthesis on "Is Bitcoin under theoretical and empirical aspects money?". As you can see I have an econometrics related part in my thesis. I want to look at the classic ...
BlankerHans's user avatar
1 vote
1 answer
101 views

Do an increase in foreign investment increase the value of domestic currency?

I'm now studying about international trade and policy. I've known that higher interest rate would attract foreign investment therefore the demand for domestic's currency gone up and increase the value ...
Ecoman's user avatar
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1 vote
1 answer
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How does commercial banks handle transfer of deposit?

In fractional reserve banking, the bank is obliged to have a minimum ratio of liquidity it have (to pay for customers' deposits) and the total money its customers have in their bank accounts. But what ...
Amir reza Riahi's user avatar
1 vote
1 answer
78 views

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 ...
Mick's user avatar
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1 vote
3 answers
214 views

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 ...
ayazasker's user avatar
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1 answer
43 views

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 ...
Daniel Muñoz's user avatar
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1 answer
56 views

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 ...
Rudi's user avatar
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2 answers
290 views

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 ...
ayazasker's user avatar
16 votes
12 answers
6k views

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. ...
Tamila Ambeon's user avatar
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1 answer
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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 ...
Anthony Fallone's user avatar
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1 answer
69 views

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 ...
Anthony Fallone's user avatar
2 votes
2 answers
116 views

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 ...
Tamila Ambeon's user avatar
1 vote
0 answers
46 views

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 ...
Leonid Konoplev's user avatar
1 vote
1 answer
76 views

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 ...
Anthony Fallone's user avatar
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2 answers
81 views

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 ...
user43223's user avatar
2 votes
1 answer
70 views

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
Pears's user avatar
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1 answer
107 views

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 ...
Anthony Fallone's user avatar
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1 answer
63 views

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.
Ezekiel's user avatar
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1 answer
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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 ...
math and physics forever's user avatar
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2 answers
154 views

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? ...
Anthony Fallone's user avatar
3 votes
3 answers
125 views

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 ...
Anthony Fallone's user avatar
0 votes
2 answers
109 views

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 ...
Anthony Fallone's user avatar
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0 answers
45 views

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 ...
Asklepian's user avatar
1 vote
0 answers
44 views

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 ...
user42354's user avatar
1 vote
0 answers
32 views

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 ...
user42354's user avatar
0 votes
3 answers
101 views

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?
rapt's user avatar
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1 vote
0 answers
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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 ...
Anthony Fallone's user avatar
0 votes
2 answers
66 views

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 ...
Anthony Fallone's user avatar
1 vote
2 answers
127 views

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?...
Anthony Fallone's user avatar
-1 votes
3 answers
240 views

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, ...
caveman's user avatar
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3 votes
0 answers
26 views

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 ...
Hieronymus Larsson's user avatar
7 votes
1 answer
457 views

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? ...
pjq42's user avatar
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2 votes
1 answer
65 views

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 ...
Finlay Weber's user avatar
1 vote
0 answers
22 views

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 ...
Oikosmonaut's user avatar
1 vote
1 answer
88 views

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 ...
Ritesh Singh's user avatar
2 votes
1 answer
155 views

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 ...
StatsScared's user avatar
1 vote
1 answer
158 views

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 ...
S. Dre's user avatar
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0 votes
1 answer
118 views

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 ...
Gabi's user avatar
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0 votes
2 answers
28k views

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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