624 PART TEN MONEY AND PRICES IN THE LONG RUN money, p. 608 medium of exchange, p. 609 unit of account, p. 609 store of value, p. 609 liquidity, p. 609 commodity money, p. 609 fiat money, p. 611 currency, p. 611 demand deposits, p. 611 Federal Reserve (Fed), p. 613 central bank, p. 613 money supply, p. 614 monetary policy, p. 614 reserves, p. 616 fractional-reserve banking, p. 617 reserve ratio, p. 617 money multiplier, p. 619 open-market operations, p. 620 reserve requirements, p. 620 discount rate, p. 620 Key Concepts 1. What distinguishes money from other assets in the economy? 2. What is commodity money? What is fiat money? Which kind do we use? 3. What are demand deposits, and why should they be included in the stock of money? 4. Who is responsible for setting monetary policy in the United States? How is this group chosen? 5. If the Fed wants to increase the money supply with open-market operations, what does it do? 6.
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