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201C13ol - CHAPTER 13 MONEY AND BANK$-What is money-How is...

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CHAPTER 13 - MONEY AND BANK$ -What is money? -How is money created? -What role do banks play in the circular flow? -Barter--the direct exchange of one good for another without using money -Money: anything generally accepted as a medium of exchange -Money serves the following purposes: -Medium of exchange--payment for goods and services -Store of value--held for future purchases -Standard of value--yardstick for measuring prices; expresses the market value of goods; $2 for a gallon of milk, $5.30 for a 6-pack of Bud -“World View” p. 255 shows that the ruble was no longer a reliable store of value -Monetary Control Act of 1980 deregulated much of the banking industry; it allowed financial firms to compete with each other -The narrowest definition of the money supply is M1 (T-75) M1 includes: -currency in circulation -transactions-account balances -traveler’s checks -Transactions-account balances--the largest component on M1; they not only include checking accounts but also NOW and
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201C13ol - CHAPTER 13 MONEY AND BANK$-What is money-How is...

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