Question
In: Economics
The commercial banking sector through its role of granting and creating credit in the money creation...
The commercial banking sector through its role of granting and creating credit in the money creation process has a large influence on the overall macro-economy. Specifically, their directing of credit has a large impact on what type of transactions happen in the economy. The majority of loans that banks grant go towards existing assets--mainly real estate. This means that the majority of banks' credit creation goes towards unproductive transactions or transactions which don't increase GDP (The purchase and sale of existing real estate assets does not add to GDP). 2. Why do you think that banks grant the majority of their loans to finance the purchase of existing assets or unproductive transactions? (Remember banks are profit maximizing firms)
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
The commercial banking sector through its role of granting and creating credit in the money creation...
The commercial banking sector through its role of granting and
creating credit in the money creation process has a large influence
on the overall macro-economy. Specifically, their directing of
credit has a large impact on what type of transactions happen in
the economy. The majority of loans that banks grant go towards
existing assets--mainly real estate. This means that the majority
of banks' credit creation goes towards unproductive transactions or
transactions which don't increase GDP (The purchase and sale of...
The commercial banking sector through its role of granting and creating credit in the money creation...
The commercial banking sector through its role of granting and
creating credit in the money creation process has a large influence
on the overall macro-economy. Specifically, their directing of
credit has a large impact on what type of transactions happen in
the economy. The majority of loans that banks grant go towards
existing assets--mainly real estate. This means that the majority
of banks' credit creation goes towards unproductive transactions or
transactions which don't increase GDP (The purchase and sale of...
The commercial banking sector through its role of granting and creating credit in the money creation...
The commercial banking sector through its role of granting and
creating credit in the money creation process has a large influence
on the overall macro-economy. Specifically, their directing of
credit has a large impact on what type of transactions happen in
the economy. The majority of loans that banks grant go towards
existing assets--mainly real estate. This means that the majority
of banks' credit creation goes towards unproductive transactions or
transactions which don't increase GDP (The purchase and sale of...
The commercial banking sector through its role of granting and creating credit in the money creation...
The commercial banking sector through its role of granting and
creating credit in the money creation process has a large influence
on the overall macro-economy. Specifically, their directing of
credit has a large impact on what type of transactions happen in
the economy. The majority of loans that banks grant go towards
existing assets--mainly real estate. This means that the majority
of banks' credit creation goes towards unproductive transactions or
transactions which don't increase GDP (The purchase and sale of...
Preface: The commercial banking sector through its role of granting and creating credit in the money...
Preface:
The commercial banking sector through its role of granting and
creating credit in the money creation process has a large influence
on the overall macro-economy. Specifically, their directing of
credit has a large impact on what type of transactions happen in
the economy. The majority of loans that banks grant go towards
existing assets--mainly real estate. This means that the majority
of banks' credit creation goes towards unproductive transactions or
transactions which don't increase GDP (The purchase and sale...
Preface: The commercial banking sector through its role of granting and creating credit in the money...
Preface:
The commercial banking sector through its role of granting and
creating credit in the money creation process has a large influence
on the overall macro-economy. Specifically, their directing of
credit has a large impact on what type of transactions happen in
the economy. The majority of loans that banks grant go towards
existing assets--mainly real estate. This means that the majority
of banks' credit creation goes towards unproductive transactions or
transactions which don't increase GDP (The purchase and sale...
What are the mechanisms the Fed uses to "control" the creation of money by the banking...
What are the mechanisms the Fed uses to "control" the creation
of money by the banking system?
According to Orr, why is the Fed's control over the creation of
money "limited"?
Creation of the FDIC encouraged reluctant depositors to put their money into the banking system. a)...
Creation of the FDIC encouraged reluctant depositors to put
their money into the banking system.
a) Aside from the benefit of reducing the probability of bank
runs, what other positive impact has this policy had in the
performance of the overall economy?
b) How could higher deposit insurance premiums for banks with
riskier assets benefit the economy?
Creation of the FDIC encouraged reluctant depositors to put their money into the banking system. a)...
Creation of the FDIC encouraged reluctant depositors to put
their money into the banking system. a) Aside from the benefit of
reducing the probability of bank runs, what other positive impact
has this policy had in the performance of the overall economy? b)
How could higher deposit insurance premiums for banks with riskier
assets benefit the economy?
Creation of the FDIC encouraged reluctant depositors to put their money into the banking system. a)...
Creation of the FDIC encouraged reluctant depositors to put
their money into the banking system.
a) Aside from the benefit of reducing the probability of bank
runs, what other positive impact has this policy had in the
performance of the overall economy?
b) How could higher deposit insurance premiums for banks with
riskier assets benefit the economy?
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