Search results
Results from the WOW.Com Content Network
The balance sheet channel theorizes that the size of the external finance premium should be inversely related to the borrower's net worth. [5] [6] [4] For example, the greater the net worth of the borrower, the more likely she may be to use self-financing as a means to fund investment.
The quantity theory of money (often abbreviated QTM) is a hypothesis within monetary economics which states that the general price level of goods and services is directly proportional to the amount of money in circulation (i.e., the money supply), and that the causality runs from money to prices. This implies that the theory potentially ...
Monetary inflation is a sustained increase in the money supply of a country (or currency area). Depending on many factors, especially public expectations, the fundamental state and development of the economy, and the transmission mechanism, it is likely to result in price inflation, which is usually just called "inflation", which is a rise in the general level of prices of goods and services.
The Fisher equation can be used in the analysis of bonds.The real return on a bond is roughly equivalent to the nominal interest rate minus the expected inflation rate. But if actual inflation exceeds expected inflation during the life of the bond, the bondholder's real return will suffer.
As the International Monetary Fund explains, long-lasting inflation results from an imbalance between the money supply and the size of the economy. An overabundance of money reduces its purchasing ...
The velocity of money provides another perspective on money demand.Given the nominal flow of transactions using money, if the interest rate on alternative financial assets is high, people will not want to hold much money relative to the quantity of their transactions—they try to exchange it fast for goods or other financial assets, and money is said to "burn a hole in their pocket" and ...
Even if you manage to score a 1.5% APY with a no-fee online savings account, your money is still losing purchasing power to the tune of about 7% per year with inflation at current levels.
So, unless you’re getting a 5.4% raise to measure up to that 5.4% inflation curve, you’re losing money. Even seemingly impervious banks stand to hemorrhage funds because of inflation.