Economics Questions and Answers

Commercial banks serve individuals and businesses, while central banks serve the country's banking system. They provide money transfers back and forth between banks and governmental institutions both domestically and in cases of transactions with foreign entities.

the major difference here is that, the central bank is the government bank and serves the country in a whole while commercial banks accepts deposit from the public

Money's most important function is as a medium of exchange to facilitate transactions. Without money, all transactions would have to be conducted by barter, which involves direct exchange of one good or service for another.

The value of any good is determined by its supply and demand and the supply and demand for other goods in the economy. A price for any good is the amount of money it takes to get that good. The value is inherent in its purchasing power which is price.

Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.

If wages increase with inflation, and if the borrower already owed money before the inflation occurred, the inflation benefits the borrower. This is because the borrower still owes the same amount of money, but now he or she has more money in his or her paycheck to pay off the debt.

By adding to its net factor income from abroad, we get NNPFC which is called national income.