Author Question: How have financial innovations such as direct deposit of paychecks, electronic payment of bills, and ... (Read 33 times)

cdr_15 · **on:** Jun 30, 2018

How have financial innovations such as direct deposit of paychecks, electronic payment of bills, and automated teller machines (ATMs) affected the velocity of money and the demand for real money balances?

What will be an ideal response?

Question 2

The phenomenon in which an insured individual takes less care in preventing the event against which she is insured is an example of

A) foolish behavior.
B) adverse selection.
C) moral hazard.
D) double coincidence of wants.

fraziera112 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Because of these innovations, each unit of money is more quickly and easily available for transactions. Each unit of money is transacted more frequently, so velocity is increased. A given volume of transactions can be accomplished with fewer units of money, so the demand for real balances is reduced.

Answer to Question 2

C