homework_5_solutions-1

homework_5_solutions-1 - ECON 51 HW#5 SOLUTIONS 1. a) Three...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON 51 HW#5 SOLUTIONS 1. a) Three functions of money are the following: - Medium of exchange → eliminates barter and need for double coincidence of wants which decreases transaction costs - Store of value → facilitates accumulation of wealth → alter consumption stream over time, make savings possible - Standard of value → compare relative worth which decreases transaction costs b) Federal Reserve is the Central Bank of the US Board of Governors which sets policy that open market committee executes c) Fed officials serve 14 years overlapping terms → LR focus and continuity Fed officials appointed → reduces political pressure Fed terms expire every 2 years → no 1 presidential term can “pack” the Board Fed does not get dollars from executive or logistic branch → earns it from members and seniorage so doesn’t have to go to Congress for appropriations each year d) Fed accepts deposits of member banks and these function as the private banks’ reserves and grants loans to private member banks at the discount window. This function
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/22/2010 for the course ECON 51 taught by Professor Leachman during the Fall '08 term at Duke.

Page1 / 4

homework_5_solutions-1 - ECON 51 HW#5 SOLUTIONS 1. a) Three...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online