Econ Dev 6

Econ Dev 6 - ECON 314 Sept 27 Sept.29 Monetary and Fiscal...

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ECON 314 Sept. 27 + Sept.29 Monetary and Fiscal Policy in Developed and Developing Countries money is an asset that is widely used as a means of payment money is a stock of assets that can be readily used to make transactions different groups of assets may be classified as money money can be defined narrowly or broadly currency in circulation, checking deposits and debit card accounts form a narrow definition of money deposits of currency are excluded from this narrow definition, although they may act as a substitute for money in a broader sense money is a liquid asset: it can be easily used to pay for goods and services or to repay debt without substantial transaction costs but monetary or liquid assets earn little or no interest illiquid assets require substantial transaction costs in terms of time, effort or fees to convert them to funds for payment but they generally earn a higher interest rate or rate of return than monetary assets let’s group assets into monetary assets (or liquid assets) and non-monetary assets (illiquid
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