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Financial Intermediary – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is a Financial Intermediary?  An “intermediary” is one who stands between two other parties. Banks are a financial intermediary—that is, an institution that operates between a saver who deposits money in a bank and a borrower who receives a loan from that bank....

Cyclical Unemployment – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is Cyclical Unemployment? Let’s make the plausible assumption that in the short run, from a few months to a few years, the quantity of hours that the average person is willing to work for a given wage does not change much, so the labor supply curve does not shift...

Double Coincidence of Wants – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Double Coincidence of Wants? In an economy without money, an exchange between two people would involve a double coincidence of wants, a situation in which two people each want some good or service that the other person can provide. For example, if an...

Medium of Exchange – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is a Medium of Exchange? First, money serves as a medium of exchange, which means that money acts as an intermediary between the buyer and the seller. Instead of exchanging accounting services for shoes, the accountant now exchanges accounting services for money....

Unit of Account – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is a Unit of Account?Third, money serves as a unit of account,  which means that it is the ruler by which we measure values. For example, an accountant may charge $100 to file your tax return. That $100 can purchase two pair of shoes at $50 a pair. Money acts as...
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