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Macro Eco Problem SET - Coursework Example

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Summary
The measurement of a flow is after every one year, which represents the total value of transactions during an accounting period and so is gross domestic product.
Q2) Various components will affect the gross domestic product. Examples…
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Macro Eco Problem SET
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Macro Eco Problem SET

Download file to see previous pages... The government hiring more police officers will bring a new service in the industry, which will translate to increase in GDP. Finally, increase in monetary transfers to the poor by the government was never accounted in the previous year hence will affect the GDP.
Q9) Credits cards cannot be referred to as money. One can have a credit card but if the account has no cash, the holder cannot access cash. They cannot therefore be referred to as money hence the name plastic money. Checks on the other hand are also not money. Money can be used any time the holder wishes to do so. For checks, they can only be usable during maturity and after confirmation by the bank of their validity.
Q10) By the bank keeping five percent in reserves and lending out money, the bank creates money. Through the interest rates charged to the borrower, the bank creates money. Assuming interest charged on borrowers is twelve percent, the bank will gain as shown ...Download file to see next pagesRead More
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