Money - central bank Structure:-board of governors (7),...

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Money: anything generally-accepted as payment for goods and services. Characteristics of money: - portable - divisible - durable - relatively stable in value - difficult to counterfeit What does money do? - medium of exchange - serves as a “unit of value” - a way to “store” value Money Supply: Money available in the economy to buy goods and services M1= currency, money available by writing checks, travelers checks M2= M1+ money that may take a little time to raise (including money in savings International Exchange of Money Rising dollar: - amount of foreign goods and services one can buy with a dollar goes up - this is good if you are buying foreign goods - this is bad if you are trying to sell goods overseas falling dollar: - amount of foreign goods and services one can buy with a dollar goes down - this is bad if you are trying to buy foreign goods - this is good if you are trying to sell goods overseas The Federal reserve system: (the fed)
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Unformatted text preview: central bank Structure:-board of governors (7), appointed by the president-chairman: Ben Bernanke-12 federal districts (each w/ a federal reserve bank)-Open market committee (policy-making) Functions:-regulations banks-performing bank-related activities for the treasury-monetary policy implements monetary policy through-open market operations-reserve requirement: governed by board of gov. (how much money fed reserve system requires banks to have in their vaults, its a certain percentage)-discount rate: gov by board of gov (when banks borrow money to acquire proper percent, its the interest rate) American banking systems Commercial banks-demand deposits (CHECKING)-time deposit (savings)-certificate of deposit-ATMS SAVINGS AND LOAN ASSC. Credit unions Nonbanks-life insurance companies, pension funds, brokerage firms, commercial/consumer finance companies...
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This note was uploaded on 04/22/2008 for the course OLS 274 taught by Professor Goodrich during the Spring '07 term at Purdue University-West Lafayette.

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Money - central bank Structure:-board of governors (7),...

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