Question 3

Not question 3 i meant to say problem 3

economic sectors, 174 income statement, 175 financial assets, 175 national balance sheet accounts, 174 financial flow accounts, 174 net worth (net wealth), 175 flow measures, 177 nonfinancial assets, 175 flow of funds, 177 stock measures, 177 System of National Accounts, 174 PROBLEMS 1. Recall that a definition of the money supply is the sum of currency and demand deposits. If we were to list currency separately in the flow of funds and add the flow of funds from the Bank of Canada, what would be the change in net wealth for the economy as a whole? Explain. Does this result contradict the discussion in Chapter 2? 2. Why do all financial assets appear on two balance sheets but physical assets on only one? 3. Suppose you are provided with the following flow of funds data for the household sector: Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 AFA 64 462 58 548 33 764 63 874 67 819 67 663 57 261 74 844 88 828 ALS 17 464 8914 2 569 13 411 9641 23 918 28 076 38 900 42 690 ANW 112 195 104 421 61 595 82 679 88 321 84 525 92 725 109 611 124 932 Find the change in the holdings of nonfinancial assets. DISCUSSION QUESTIONS 1. Why are liability changes considered a source of funds? Explain your answer. 2. Explain the difference between stocks and 3. What are the advantages and drawbacks of the New Zealand system of balance sheet accounting