16-money - Adding Money To The Model Lecture 16-PREVIEW...

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macroS2010 Lec16-page 1 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ Adding Money To The Model Lecture 16-PREVIEW Jennifer P. Wissink ©2009 Jennifer P. Wissink, all rights reserved. March 17, 2010
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macroS2010 Lec16-page 2 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ Measuring the Supply of Money in the United States M 1 , or transactions money is money that can be directly used for transactions. M1 d + demand deposits (checking account balances) + travelers checks + other checkable deposits (e.g., NOW accounts) M 1 is a stock measure—it is measured at a point in time on a specific day .
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macroS2010 Lec16-page 3 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ Measuring the Supply of Money in the United States M 2 , or broad money , starts with M 1 and includes near monies , or close substitutes for transactions money. M 2 d M 1 + savings accounts + money market deposit accounts + small time deposits + other near monies The main advantage of looking at M 2 instead of M 1 is that M 2 is sometimes more stable. There is even an M3!
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macroS2010 Lec16-page 4 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ The Banking System Financial intermediaries are banks and other financial “bank-like” institutions that act as a link between those who are savers and might want to lend out money and those who want to borrow money. Commercial Banks – banks that offer a broad range of deposit accounts, including checking, savings and time deposits and extend loans to individuals and business. Checking accounts = demand deposits of public = Dp or DDp Other types of “banks” or “bank-like” institutions – savings and loan associations – mutual savings associations – credit unions – insurance companies – pension funds
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macroS2010 Lec16-page 5 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ The Federal Reserve System The Federal Reserve System (a.k.a. The FED) is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer,
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This note was uploaded on 10/24/2010 for the course ECONOMICS 1120 at Cornell University (Engineering School).

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16-money - Adding Money To The Model Lecture 16-PREVIEW...

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