CHAP 20.docx - Money, Financial Institutions, and the...

This preview shows page 1 - 2 out of 2 pages.

Money, Financial Institutions, and the Federal ReserveWHY MONEY IS IMPORTANTThe Federal Reserve (the Fed)in charge of money in the United StatesMoney: anything people generally accept as payment for goods and servicesBarter:direct trading of goods or services for other goods or services5 standards for a useful form of money:PortabilityDivisibilityStabilityDurabilityUniquenessMoney supplythe amount of money the Federal Reserve makes available for people to buy goods and servicesQE 1/ QE2: Quantitative easing one and two = Fed was creating more money (to move the economy)US Money Supply: M-1, M-2, M-3M=money.M-1 includes coins and paper bills, available by writing checks, held in traveler’s checksM-2 everything in M-1 + money in saving accounts, money market accs, mutual funds, …(take more time to obtain than coins and bills)MOST COMMONM-3: M-2 + big depositsSize of the money supply also affectsemploymentandeconomic growthor declineGlobal exchange of money

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 2 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Fall
Professor
NoProfessor
Tags
Federal Reserve The Fed, Monetary Policy, Federal Reserve System, QE2

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture