The Fed’s Primary Task - Business demand for money

4 important questions on The Fed’s Primary Task - Business demand for money

How do businesses balance their needs for liquidity and returns?

Firms assess their money requirements for transactions against the foregone return on invested assets.

What is a primary reason businesses need money?

Money is essential for transactions such as paying suppliers and salaries.

What proportion of the total money stock in the economy do businesses hold?

Businesses collectively hold more than half of the total money stock in the economy.
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Why is liquidity important for firms?

It shows that liquidity is vital as firms hold significant amounts of money.

The question on the page originate from the summary of the following study material:

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