Explore BrainMass
Share

Financial intermediation - holding on to currency

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Financial intermediation is the process by which financial institutions transfer funds from ultimate lenders, i.e. savers, to ultimate borrowers, i.e. investors. It is a process that makes the economy operate more efficiently and enhances the ability of the economy to grow. Financial intermediation significantly reduces transac­tions costs. Financial intermediaries take the relatively small savings of large numbers of savers and provide them to investors in relatively large amounts. Class, savings accounts, certificates of deposit, and bonds pay interest and stocks pay dividends.

Why does anyone hold onto currency or other forms of money and lose this extra income? (150 words)

© BrainMass Inc. brainmass.com October 17, 2018, 12:22 am ad1c9bdddf
https://brainmass.com/economics/the-time-value-of-money/financial-intermediation-holding-currency-291745

Solution Preview

Why does anyone hold onto currency or other forms of money and lose this extra income?

Financial intermediation is the process by which financial institutions transfer funds from ultimate lenders, i.e. savers, to ultimate borrowers, i.e. investors. It is a process that makes the economy operate more efficiently and enhances the ability of the economy to grow. Financial intermediation significantly reduces transac­tions costs. Financial intermediaries take the relatively small savings of large numbers of savers and ...

Solution Summary

This explanation provides you a comprehensive argument relating to Holding on to currency

$2.19
Similar Posting

Money demand help is provided.

What would be the effect of each of the following on the money demand, M1 (with other things held equal)?
a. An increase in real GDP
b. An increase in the price level
c. A rise in the interest rate on savings accounts and treasury securities.
d. A doubling of all prices, wages, and incomes (calculate the ecact effect on the money demand.)
e. An increase in the interest rate banks pay on checking accounts.

With a graphic for each answer. Please see attached documents for help.

View Full Posting Details