by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Circular Flow Model? A good model to start with in economics is the circular flow diagram. It pictures the economy as consisting of two groups—households and firms—that interact in two markets: the goods and services market in which firms sell and...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is a National Saving and Investment Identity? The national saving and investment identity provides a useful way to understand the determinants of the trade and current account balance. In a nation’s financial capital market, the quantity of financial capital...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is a Standard of Deferred Payment? Finally, another function of money is that it must serve as a standard of deferred payment. This means that if money is usable today to make purchases, it must also be acceptable to make purchases today that the purchaser will...
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...
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...
