Consider again the tropical island described in Problem 12. Under what circumstances would you recommend the issue of a paper currency by the government of the island? What advantages might this strategy have over the use of oranges as money?
Answer to relevant QuestionsWhat factors should you take into account when considering using the following assets as stores of value?a. Goldb. Real estatec. Stocksd. Government bondsWhy might each of the following commodities not serve well as money?a. Tomatoesb. Bricksc. CattleWhichusually grows faster: M1 or M2? Produce a graph showing M2 divided by M1. When this ratio rises, M2 outpaces M1, and vice versa. What is the long-run pattern? Is the pattern stable? Life insurance companies tend to invest in long-term assets such as loans to manufacturing firms to build factories or to real estate developers to build shopping malls and skyscrapers. Automobile insurers tend to invest in ...Advances in technology have facilitated the widespread use of credit scoring by financial institutions in making their lending decisions. Credit scoring can be defined broadly as the use of historical data and statistical ...
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