Description
Questions answered in the peer review.
- U.S. paper currency is made with several features that are difficult to counterfeit, including a security thread, color-shifting ink, microprinting, a portrait, a watermark, and a fine-line printing pattern. As duplication technology, however, continually improves and more and more counterfeits are circulated, what will happen to the following?
- The value of money circulated.
- The volume of cashless transactions.
- The amount of money the U.S. Treasury spends to introduce additional security measures.
- In November 2008, the Fed began to pay interest on reserves held at the bank.
- What effect would you expect on excess reserves?
- Did banks generally favor or oppose this action?
- Would central banks generally favor or oppose this action?
- What effect did this probably have on interest rates paid by banks?
Your Task: Read the posting of your colleagues to further the discussion. Simply saying "I agree, great point, etc" is not a sufficient peer review. You must discuss your peer's argument with detailed evidence (include citations). (minimum of 100 words)
- Please note! Friendly greetings and compliments are not included in the word count.
- Discussions and responses must show evidence of knowledge of facts pertaining to the issues being discussed and must attempt to apply the economic terms, ideas, and theories.
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Explanation & Answer
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RESPONSE POST 2
According to Adam Smith’s principles of money supply and demand, an increase in
the supply of money in circulation causes an influx in expenditure; thus, causing an increase
in market prices in the short-run. In the long-run, the value of money starts to decline due to a
decrease in aggregate demand for goods (Curott, 2017). An increase in dollar bills in
circulation will also lead to an increase in the volume of cash transactions in the short-run. The
availability of counterfeits money will raise U.S treasury expenditure in campaigns to caution
citizens as well as the development of technology to detect counterfeit dollar bills in all
financial intuitions. An increase in awareness will also drive people to cashless payments but
depositing money on various financial institutions.
The financial crisis of ...