Mechanism of Electronic Payment via Bank Liability Transfer in the Marco-Julia Model
In the Marco-Julia model, electronic payments are facilitated by the bank transferring its own liability between account holders. For instance, when Marco pays the supermarket, he instructs the bank via an app to move five units of its debt from his account to the supermarket's. Consequently, the bank's obligation to Marco is reduced, while its obligation to the supermarket increases by the same amount, assuming both parties bank with the same institution.
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Introduction to Macroeconomics Course
Ch.6 The financial sector: Debt, money, and financial markets - The Economy 2.0 Macroeconomics @ CORE Econ
The Economy 2.0 Macroeconomics @ CORE Econ
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Mechanism of Electronic Payment via Bank Liability Transfer in the Marco-Julia Model
An individual in an economy without official currency deposits 100 bundles of wood at a central institution. They instruct the institution to allocate 70 bundles to a long-term 'storage' account and 30 bundles to a 'transaction' account. The transaction account can be used to make payments to merchants via a mobile application. If this individual uses the app to buy food worth 8 bundles of wood, what will be the new balances in their accounts?
Advantage of a Ledger-Based Payment System
Adoption of a New Payment System
In an economy where physical goods are used for trade, a producer deposits 100 units of their goods into a bank. They place 80 units in a long-term 'savings' account and 20 units in a 'current' account, which can be used for payments via a mobile app. What is the primary advantage of using the 'current' account for a small purchase, as described in this system?
In an economic system where a bank facilitates payments from accounts holding physical goods (like grain), a depositor must physically withdraw their goods from the bank each time they wish to make a purchase from a merchant who also uses the same bank.
Evaluating a Goods-Based Digital Payment System
In an economy that uses physical goods for exchange, a farmer deposits 100 units of grain at a bank. She directs the bank to place 30 units into a 'current account' for daily transactions and the remaining 70 units into a 'savings account' for long-term storage. The current account is linked to a mobile app for payments. If the farmer attempts to use the app to purchase supplies worth 35 units of grain, what is the most likely outcome of this transaction?
In an economic system where physical goods are deposited in a bank and managed through different accounts, match each action with the corresponding banking component or concept.
A producer in an economy without a central currency wants to use a local institution's payment services to buy supplies from a merchant. Both the producer and the merchant use this institution. Arrange the following actions into the correct chronological sequence for the producer to set up their account and complete the purchase.
Rationale for Account Segregation in a Goods-Based Banking System
Learn After
Unaffected Bank Balance Sheet During Internal Payment Transfers
Analogy Between Marco-Julia Model Payments and Modern Electronic Transactions
Two individuals, Alex and Ben, both hold accounts at the same bank. Initially, the bank's records show it has a liability of 100 units to Alex and a liability of 50 units to Ben. Alex then uses a banking app to make a payment of 30 units to Ben. Considering only this transaction, which of the following statements correctly analyzes the new state of the bank's liabilities?
Manual Bank Transaction
Bank's Role in Internal Electronic Payments
When a customer uses a banking app to pay another customer at the same bank, the transaction is completed by the bank reducing its total assets to reflect the transfer of funds.