%u2022 Discuss how payment systems have evolved over time to reduce transactions
ID: 1177209 • Letter: #
Question
%u2022 Discuss how payment systems have evolved over time to reduce transactions costs and predict how technological advancements will continue to reduce transaction costs in the future. Provide specific examples to support your response.
%u2022 Consider how the U.S. government determines the amount of money in the economy and make at least one recommendation for improving the accuracy of its measurements.
%u2022 Consider a long-term debt you currently own (e.g., a mortgage or student loan) and discuss how you would take present value into account when deciding whether you should retire that debt ahead of schedule. Explain your rationale.
%u2022 From the e-Activity, discuss why it is important to use present value when conducting the cost-benefit analysis of the project you researched. Provide specific examples to support your response.
Explanation / Answer
1) payment system has developed technologically very well. Transaction costs has been reduced due to introduction of online money transfer instead of courier payment which used to take so much time. 2) money in economy can be found by estimating equation M=C*V, where C- currency in economy, V- Velocity of transaction(how many times money changes hands). One recommendation is including short term bonds which are very liquid as currency in C , so as to get accurate measure. 3)present value can be taken into account by discounting amount of debt remaining with my required rate of return . If we discount another debt amount at that point of time with same rate and if we get less present value we retire the debt. 4)present value is important for cost benifit analysis as it tells us about time value of money and tells whether it is benificial to invest in that particular project
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