You purchase a good by writing a check for $1,000. Considering the financial payments system this check follows, when is the check money? Explain.
What will be an ideal response?
The check itself is never money; rather it is the balances on deposit that represent money. Therefore the $1,000 was money when it was in your checking account and that $1,000 will be money again when the Federal Reserve credits the reserve account of the bank receiving the check (and debits your bank's reserve account).
You might also like to view...
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
A load fund
A) charges a commission for purchases or sales. B) is not obligated to redeem shares issued. C) earns income only from management fees. D) issues shares that may sell at a discount to the market value of the underlying assets.
A jar has 20 red jelly beans and 40 black jelly beans. If you pick a red jelly bean and put it back, what are the odds of picking a red jelly bean next?
A) 20/40 B) 20/60 C) 40/60 D) 0
An analysis of production possibilities curves indicates that the reason why underdeveloped nations have difficulties increasing their economic growth rates is because:
a. low population growth rates mean fewer workers to produce food and other necessities. b. their production possibilities curves shift in when resources are increased. c. their production possibilities curves are positively sloped, unlike those in more developed economies. d. they must cut back their already meager consumption levels to increase capital production. e. the opportunity cost of shifting resources from consumption goods to capital goods is relatively low.