Question

In: Economics

What does ‘the hierarchy of money’ mean?

What does ‘the hierarchy of money’ mean?

Solutions

Expert Solution

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


Related Solutions

What does Maslow mean by the hierarchy of prepotency?
What does Maslow mean by the hierarchy of prepotency?
Is money exogenous or endogenous? What does this mean?
Is money exogenous or endogenous? What does this mean?
What role does money play in (a) the hierarchy of needs theory (b) two-factor theory, (c)...
What role does money play in (a) the hierarchy of needs theory (b) two-factor theory, (c) equity theory, and (e) motivating employees with a high nAch?
Define the velocity of money. What does it mean if the percent change in velocity is...
Define the velocity of money. What does it mean if the percent change in velocity is negative? Give a real-life example of how this could be possible? What central banking nightmare can occur if we see the percent change in velocity of money turn negative and the Fed does not react?
What does it mean to borrow money on a discount basis? This has to do with...
What does it mean to borrow money on a discount basis? This has to do with borrowing money from a bank on a discount basis. This is not related to bond issues/sales. (See chapter 7, page 238, "Interest Calculation Method"). Be cautious: borrowing on a discount basis has to do with going to a lender (banker) for a loan. Be sure not to confuse borrowing on a discount bases with the bond discount discussed later in chapter 7.
What does it mean when we say that money functions as a medium of exchange, as...
What does it mean when we say that money functions as a medium of exchange, as a store of value, and as a unit of account?
Money is what Money does. Explain this statement.
Money is what Money does. Explain this statement.
Questions: 1. Economists believe in the “Long-run neutrality of money”; what does that mean? If monetary...
Questions: 1. Economists believe in the “Long-run neutrality of money”; what does that mean? If monetary policies help in the short run but do not help in the long run, should we not bother with those policies? What does this tell you about the current monetary policies of the Fed?
What does it mean to have a good life? What does it mean to be a...
What does it mean to have a good life? What does it mean to be a good person?
What does it mean to be "modern" biologically and culturally? What does it mean to be...
What does it mean to be "modern" biologically and culturally? What does it mean to be human? Antropology 101
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT