What is a money drain?

What is a money drain?

A dollar drain is when a country imports more goods and services from the United States than it exports back to the U.S. The net effect of spending more money importing than is received from exporting causes a net reduction in the total U.S. dollar reserves of that country.

What is the real meaning of cash?

Cash is legal tender—currency or coins—that can be used to exchange goods, debt, or services. Sometimes it also includes the value of assets that can be easily converted into cash immediately, as reported by a company.

What is the role of money multiplier?

The Money Multiplier refers to how an initial deposit can lead to a bigger final increase in the total money supply. This bank loan will, in turn, be re-deposited in banks allowing a further increase in bank lending and a further increase in the money supply.

How does money multiply?

The money multiplier tells us by how many times a loan will be “multiplied” through the process of lending out excess reserves, which are deposited in banks as demand deposits. Thus, the money multiplier is the ratio of the change in money supply to the initial change in bank reserves.

How do you calculate currency drain money multiplier?

The money multiplier is the number by which a change in the monetary base is multiplied to find the resulting change in the quantity of money. Change in quantity of money = Money multiplier X Change in monetary base. The money multiplier is determined by the required reserve ratio (r) and by the currency drain (c).

Why is it called cash?

Etymology. The English word “cash” originally meant “money box”, and later came to have a secondary meaning “money”. The word “cash” derives from the Middle French caisse (“money box”), which derives from the Old Italian cassa, and ultimately from the Latin capsa (“box”)..

What are the types of cash?

There are five types of cash equivalents: Treasury bills, commercial paper, marketable securities, money market funds, and short-term government bonds.

• Treasury Bills.
• Commercial Papers.
• Marketable Securities.
• Money Market Funds.

What is the difference between monetary base and money supply?

Money Supply. In comparison to the money supply, the monetary base only includes currency in circulation and cash reserves at a bank. In contrast, the money supply is a broad term that encompasses the entire supply of money in a country.

How can I double my money in one month?

Here are some options to double your money:

1. Tax-free Bonds. Initially tax- free bonds were issued only in specific periods.
2. Kisan Vikas Patra (KVP)
3. Corporate Deposits/Non-Convertible Debentures (NCD)
4. National Savings Certificates.
5. Bank Fixed Deposits.
6. Public Provident Fund (PPF)
7. Mutual Funds (MFs)
8. Gold ETFs.

What is cash drain in economics?

cash drain. a constraint on the expansion of the MONEY SUPPLY through BANK DEPOSIT CREATION, caused by individuals retaining larger amounts of cash than usual. This means that not all of the increase in cash calculated by using the reciprocal of the RESERVE ASSET RATIO is passed on from the public back into the banking system.

Is there such a thing as currency drain?

In reality there is a currency drain, people do keep their money at the bank, do not demand it all the time, but at the same time, still require cash. The currency drain depends on a number of factors including:

What is the operating loss (the ‘cash drain’)?

The operating loss (the ‘cash drain’). comprise principally the cumulative gross operating loss (‘cash drain’), without taking account of the productivity gains.

What is the correct definition of the word drain?

drain. noun. English Language Learners Definition of drain (Entry 2 of 2) : something (such as a pipe) that is used for removing a liquid from a place or container. : something that uses a lot of time, money, etc. See the full definition for drain in the English Language Learners Dictionary.