{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Lecture 21 Notes

Lecture 21 Notes - ECN 211 Macroeconomic Principles L21...

Info icon This preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
10/30/09 1 ECN 211 Macroeconomic Principles L21: Money and Banks
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
10/30/09 2 What is Money? Money … anything that is generally acceptable to sellers in exchange for goods and services Examples – $ Cigarettes in WW2 POW camps
Image of page 2
10/30/09 3 Wealth and Money People hold their wealth in many different forms: – Property – Equities/Stocks – Cash Bank Accounts Government Bonds • Why? – A liquid/return trade-off Note: we are going to ignore the risk/return tradeoff
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
10/30/09 4 Liquidity Liquid Asset … an asset that can easily be exchanged for goods and services Higher liquidity implies lower returns Money is the most liquid asset Therefore has the lowest (zero return).
Image of page 4
10/30/09 5 Functions of Money ‘Money is a matter of four functions – a medium, a measure, a standard and a store’
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
10/30/09 6 Medium of exchange It lowers transactions costs Do not need the “double coincidence of wants” Measure of value All goods and services are priced in common monetary units Allows us to compare relative prices easily. Only need one set of prices.
Image of page 6
10/30/09 7 Store of Value Money retains its value through time usually Need to control inflation. Standard of deferred payment Money may be used to make future payments. Debt is written in dollar amounts.
Image of page 7

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Other properties of money • Portable Has to be portable to be an effective medium of exchange.
Image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern