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Chapter 15: Q3. (page 572)

How might future actions by the Federal Open Market Committee affect the future of PayPal and similar services?

Short Answer

Expert verified

The federal open market committee might make decisions regarding getting the transactions and transfers much easier through the bank apps themselves. Thus, in that case, these third-party apps like PayPal might get affected to the extent of elimination from the market.

Step by step solution

01

Effect of the federal open market committee on future PayPal and similar services

The federal open market committee might decide to enable all the banks to transfer funds and make the transaction easier through a customized respective bank app that can be accepted anywhere. This will affect third-party services like PayPal since their service would no longer be needed if that happens since people would find it easier to access transactions through their bank's apps than from some third-party app.

Such a decision could also eliminate PayPal and similar services apps from the market.

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Most popular questions from this chapter

Why does monetary policy affect the economy in the short run but not in the long run?

In setting monetary policy, which central bank—one that operates according to a Taylor rule or one that operates by inflation targeting—is likely to respond more directly to a financial crisis? Explain.

Which of the following will increase the opportunity cost of holding cash or reduce it? Explain.

a. In order to attract new customers, the new internet payment firm, PayBuddy, announces it will pay0.5% interest on cash balances in a PayBuddy account.

b. To attract more deposits, banks raise the interest paid on six-month CDs.

c. In an effort to increase holiday sales, stores offer one-year zero-interest deals on purchases made with store credit cards.

There is an increase in the demand for money at every interest rate. Draw a diagram showing the effect of this on the equilibrium interest rate for a given money supply.

In 2010, only around 25% of mobile phones in the United States were smartphones. In 2017, that number increased to more than 80%. How does this situation play into the PayPal story, and how does it fit into the broader pattern of monetary history?
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