Question

What does ‘the hierarchy of money’ mean?

Answer 1

Hierarchicy of money is a multi-tiered pyramids where these multi- tiered represents Promises (IOU) with different degrees of acceptability. Hierarchicy of money.

The first hierarchy represents most acceptable money and the last hierarchicy means the least acceptability money. The top most pyramid represents government money , then banks , then , non financial business and lastly household.

Since government is most acceptable money , so private sector leverages the government money. But privates sectors cannot create Net financial assets