ECS3701 Assignment 02 SEMESTER 2 2024 2.01 Discuss how collateral and indirect finance are used in explaining the basic facts about financial structure around the world. 2.02 The two ways in which government can finance its deficit is through monetizi

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Table of Contents

Introduction ................................................................................................................ 3

2.01. Collateral and Indirect Finance in Explaining Financial Structure ...................... 3

Collateral ................................................................................................................ 3

Indirect finance ....................................................................................................... 4

2.02. Government Deficit Financing: Monetizing Debt vs. Printing Money ................. 4

Monetizing debt ...................................................................................................... 4

Printing money ........................................................................................................ 5

2.03. Central Bank Independence and Long-term Objectives .................................... 5

2.04. Is There a Single, Precise Definition of Money? ................................................ 6

2.05. The Money Multiplier ......................................................................................... 7

Conclusion ................................................................................................................. 8

References ................................................................................................................. 9




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