by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Quantity Theory of Money? According to the quantity theory of money, the general price level of goods and services is proportional to the money supply in an economy. What is the Equation for the Quantity Theory of Money? American economist Irving Fisher...
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....
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Frictional Unemployment? In a market economy, some companies are always going broke for a variety of reasons: old technology; poor management; good management that happened to make bad decisions; shifts in tastes of consumers so that less of the firm’s product...
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...
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....
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...
