Describe how financial innovation has affected the demand for ...

[codyclark]

Describe how financial innovation has affected the demand for money.
 
  What will be an ideal response?

Question 2

In an unregulated market for healthcare, the equilibrium quantity is that at which ________ and the efficient quantity is that at which ________.
 
  A) D = S; MB = MSC
  B) D = S; MSB = MSC
  C) D = MSC; MB = MSC
  D) MSB = S; MB = S

[tandmlomax84]

Answer to Question 1

Financial innovation is the development by depository institutions of new financial products and changing technology within the banking industry. Examples include daily interest checking deposits, automatic transfers of money between deposits, ATM's and credit cards. In general these innovations have allowed the public to be more flexible in their choices between cash and less liquid assets as banks have delivered greater liquidity without forgoing interest earned. The result has been a large decrease in the demand for M1 and a smaller decrease in the demand for M2.

Answer to Question 2

B