Econ FEB - Monetary policy in modern times can print higher...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
February 11, 2008. **CLASS BEFORE EXAM** Test is 40 Multiple Choice questions. Gresham’s law: bad money replaces good money. e.g. When actual gold coins (good form of $) is compared to a certificate given by government (bad form of $), then only certificates will be present and gold coins will disappear. Bad form/good form of money are in a relative sense of the market. Public confidence: Legal tender (all currency, sometimes excluding pennies & small change). Responsibility of monetary policy: policy to keep money supply growth at a reasonable rate. o Assures us that the value of our money will not significantly decline (stability). o
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Monetary policy in modern times can print higher money supply & govt can earn profit by doing so. This govt profit is called, or SEIGNEORAGE (pron. See-nee-orage). o Govts that have been too greedy of seigneorage have paid a significant price for it. E.g. Germany, Turkey,etc. Modern money supply is called Credit Money or fiduciary money. Topics on Test 1: Definitions: Economics (micro & macro, normative & positive), factors of production, economic system, communism, capitalism, circular flow, opportunity cost, economic hypothesis, PPC, law of demand & its validity, law of supply. 1 & 2 of both chapter 3 of micro....
View Full Document

Ask a homework question - tutors are online