Discuss the Similarities and Differences Between Real and Financial Assets

Question

Examlex · Accepted Answer

The Answer is Real assets represent the productive capacity of the firm and appear as assets on the firm's balance sheet.Financial assets are claims against the firm and thus appear as liabilities on the firm's balance sheet.On the other hand, financial assets are listed on the asset side of the balance sheet of the individuals who own them.Thus, when financial statements are aggregated across the economy, the financial assets cancel out, leaving only the real assets, which directly contribute to the productive capacity of the economy.Financial assets contribute indirectly only.
Feedback: The purpose of this question is to ascertain if the student understands the difference between real and financial assets, both in the aggregate balance sheet context and the relative contribution of the two types of assets to the productive capacity of the economy.

Discuss the Similarities and Differences Between Real and Financial Assets

Essay

Correct Answer:
Verified

Discuss the Similarities and Differences Between Real and Financial Assets

Essay

Correct Answer:VerifiedShow Answer

Correct Answer:
Verified