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Author Question: How have depository institutions made innovations that have influenced the composition of money? ... (Read 109 times)

lracut11

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on: Jun 29, 2018
How have depository institutions made innovations that have influenced the composition of money?
 
  What will be an ideal response?

Question 2

Using Figure 15.1, identify which demand curve would belong to that of a purely competitive firm and which would belong to a monopolistically competitive firm and explain your reasoning.
 
  What will be an ideal response?


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Jsherida

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Checking deposits at thrift institutions such as S&L's savings banks, and credit unions are examples of deposits that were created by innovations in the 1980s and 1990s. These deposits have become an increasingly large percentage of M1 . Savings deposits have decreased as a percentage of M2, while time deposits and money market mutual funds have increased, and checking deposits at commercial banks have become a decreasing percentage of M1 .

Answer to Question 2

The demand curve that a monopolistic competitor faces is likely to be less elastic than the demand curve that a perfectly competitive firm faces. Demand is more elastic than the demand curve that a monopolist faces because close substitutes for the products of a monopolistic competitor are available. Therefore D1 belongs to the purely competitive firm and D2 belongs to the monopolistically competitive firm.


lracut11

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Reply 2 on: Jun 29, 2018
Gracias!

Liamb2179

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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