9.16.10 - 9.16.10 Money, Financial Institutions, and the...

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9.16.10 Money, Financial Institutions, and the Federal Reserve - Ben Bernanke – Chairman of the Federal Reserve - Why Money is Important What is money? Money – anything people generally accept as payment for goods and services Barter – direct trading of goods or services for other goods or services Five standards for a useful form of money Portability Divisibility – different sized coins and bills can represent different values Stability – when everyone agrees on the value of coins, the value of money is relatively stable Durability => coins last for thousands of years Uniqueness – hard to counterfeit elaborately designed and minted coins What is the Money Supply Money supply – amount of money the Federal Reserve makes available for people to buy goods and services Liquidity – how easily something can become cash M-1 – money that can be accessed quickly and easily Coins, paper, checks and travelers checks Anything good as a dollar bill M-2 – money included in M-1 plus money that may take a little more time to obtain Savings accounts, money markets accounts, mutual funds M-3 – M-2 plus big deposits like institutional money market funds Managing Inflation and the Money Supply
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This note was uploaded on 11/21/2010 for the course BUSINESS 101 taught by Professor Monastersky during the Fall '10 term at Bergen Community College.

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9.16.10 - 9.16.10 Money, Financial Institutions, and the...

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