A Key Financial Innovation of the Eighteenth Century Was

question 40

Multiple Choice

A key financial innovation of the eighteenth century was

• A)the creation of insurance policies.
• B)the circulation of paper banknotes compensating for a lack of coinage.
• C)the establishment of a new international currency to facilitate trade.
• D)deficit spending by enlightened monarchs to pay for vital government reforms.
• E)the increased use of bullion in preference to less reliable paper money.

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Definitions:

Demand For Loanable Funds Curve

The demand for loanable funds curve illustrates the relationship between the interest rate and the quantity of loanable funds demanded by borrowers, showing how borrowing can decrease as interest rates rise.

Interest Rate

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal, usually on an annual basis.

Loanable Funds

The funds in financial institutions that are available for borrowing.

Higher Interest Rate

An increased percentage charged on borrowed money or paid on savings and investments.