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Question
Dear Prof Raza

Are there chances of getting Counterfeit notes from Automated Teller Machines?
Could this be considered rare cases?

In case yes, Stringent quality checks from the Bank's ATM has to do quality checks before depositing notes in the ATM.

Could this be the solution?

Thanks
Prashant

Answer
Hi Prashant,

This is an important question, and it seems you have already partly answered this question.

Actually, if at all it could be a problem, it would indeed "be considered rare."

Let me tell you, first of all, there is almost no chance of any customer's getting counterfeit notes from ATMs. Here are the reasons.

ONE:  Banks always get the money from two sources: (a) the customers and (b) the central bank (when required to meet clients' unforeseen excess demand for cash).


The central bank of a country is never expected to supply counterfeit currency unless otherwise some corrupt people in the bank hold sway, and that is not possible in most advanced countries. Even in developing countries where, because of political instability and all-round corruption infesting the  central bank  with local and foreign scams (such as what recently happened in Bangladesh), this is immediately stemmed with strong actions. Because, however corrupt a government or the opposition is, international image, confidence in national currency, and overall domestic transactions and international trade relations have to be safeguarded if the government has to stay in power. So no government will allow it. Appropriate measures will be taken, and counterfeit money would be withdrawn. So, even if such extremely rare case happens, bank customers are unlikely to be penalized.

When commercial banks receive currency notes from clients, such notes are passed through sophisticated machines both for (i) checking genuineness and for (ii) counting. If one or two counterfeit notes are found, they are returned to the customer. If too many are found, then some actions may be taken, through police or legally. So there is no chance in this modern world for counterfeit notes to get into the bank's coffer. That did not take place in the old days, either. While there were no sophisticated machines to check the notes, there were at the same time no sophisticated machines for the criminals to produce counterfeit bills.


TWO:  Modern ATM machines are so designed that they will produce to the customer the notes of exact denominations that the customer wants. The computerized sensors within the machine will sort out notes according the specifications on the notes, and such specifications have to be genuine. Genuine specifications must come from genuine notes. Humans may make mistakes, but machines will never pass a fake note to the customer. Take it that the machines will not have any fake notes in the first place for reasons I have already explained above.


So, Prashant, so long the world is run with sophisticated machines and so long the countries are not too bad politically, a bank customer's getting fake notes from ATMs is almost impossible.

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Eklimur Raza

Expertise

It appears some students in this website are confused about elasticity of demand and the slope of the demand curve when they are trying to figure out why rectangular hyperbola comes up in case of unitary demand curve. First, they don't know that RH can be depicted in a positive quadrant of price,quantity plane. Secondly, they make the mistake that the slope of RH is constant at -1. Two points could help them: first, e=1 at each and every point of the RH, because the tangent at any point shows lower segment=upper segment (another geometric definition of e); yet slopes at different points,dQ/dP, are different; second, e is not slope but [(Slope)(P/Q)]in absolute terms. Caveat: only if we measure (log P) along the horizontal axis and (log Q) up the vertical axis, can we then say slope equals elasticity --in which case RH on P,Q plane is transformed into a straight-line demand curve [with slope= -tan 45 deg] on (log Q),(logP) plane, and e= -d(log Q)/d(log P). [By the way, logs are not used in college textbooks --although that is helpful in econometric estimation of elasticity viewed as an exponent of P, when demand equation is transformed into log-linear form.] I have not found the geometrical explanation I have given in any textbook followed in undergraduate and college classes in Canada (including the book followed in a university where I taught for a short time and in the book followed in George Brown College, Toronto, where I teach.

Experience

About 11 years' teaching economics and business studies, and also English, history and elementary French.Practical experience in a development bank, working with international donor agencies like the World Bank and the ADB. Experience in free-lance journalism, including Canada's "National Post."

Organizations
I teach micro- and macroeconomics at George Brown College (continuing education), Toronto, ON, Canada.

Publications
Many articles and editorials, on different subjects, in English newspapers. Recently an applied Major Research Paper, based on a synthesis of the Solow growth model and the Lewis two-sector model, has be accepted by Ryerson University, Toronto. Professors Thomas Barbiero and Eric Cam, Ryerson University, accepted the paper.

Education/Credentials
Master degree in Interantional Economics and Finance and diploma with honours in Business Administration from Canada.

Awards and Honors
Received First Prize in an inter-university Literary Contest.

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