MEASURING THE MONEY SUPPLY

MEASURING THE MONEY SUPPLY - SECTION 29: MEASURING THE...

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SECTION 29: MEASURING THE MONEY SUPPLY
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MEASURING THE MONEY SUPPLY Currency is printed by the Bureau of Engraving at the request of the Federal Reserve System. Currency is issued by the Federal Reserve System. Our dollar bills are FEDERAL RESERVE NOTES FEDERAL RESERVE NOTES are accepted because they are LEGAL TENDER
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MEASURING THE SUPPLY OF MONEY M1 : (Money used for day to day transactions.) 1. Coins and currency held outside banks 2. Demand deposits 3. Traveler’s checks 4. Other checkable deposits The types of money included in M1 are HIGHLY LIQUID. They can easily and rapidly be transformed into cash.
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LIQUID ASSETS Assets that can be turned into cash rapidly and with little loss of value. M1 contains those portions of the money supply that are closely connected to current economic activity. Money included in M1 is related to money being used as a medium of exchange rather than money being used as a store of value .
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OTHER MEASURES OF THE MONEY SUPPLY M2 = M1 + money market fund shares
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This note was uploaded on 04/15/2008 for the course ECON 0110 taught by Professor Kenkel during the Fall '08 term at Pittsburgh.

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MEASURING THE MONEY SUPPLY - SECTION 29: MEASURING THE...

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