Econ- Chap 10 - Overview-10 x The functions and measurement...

Info icon This preview shows pages 1–12. Sign up to view the full content.

View Full Document Right Arrow Icon
Principles of Macroeconomics: Canadian Edition Overview-10 The functions and measurement of money The Bank of Canada and its functions Fractional reserve banking - how does it work? The money multiplier Monetary control-how does B of C control money supply?
Image of page 1

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

View Full Document Right Arrow Icon
WHY MONEY? Without money, trade would require barter , the exchange of one good or service for another. Every transaction would require a double coincidence of wants – the unlikely occurrence that two people each have a good the other wants. Most people would have to spend time searching for others to trade with – a huge waste of resources. This searching is unnecessary with money , the set of assets that people regularly use to buy g&s from other people.
Image of page 2
Principles of Macroeconomics: Ch 10 Canadian Edition The Meaning of Money Money is the set of assets in the economy that people regularly use to buy goods and services from other people.
Image of page 3

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

View Full Document Right Arrow Icon
Principles of Macroeconomics: Ch 10 Canadian Edition Three Functions of Money Medium of Exchange : anything that is readily acceptable as payment. Unit of Account : serves as a unit of account to help us compare the relative values of goods. Store of Value : a way to keep some of our wealth in a readily spendable form for future needs.
Image of page 4
Principles of Macroeconomics: Ch 10 Canadian Edition The Two Types of Money Commodity Money: something that performs the function of money and has alternative, non-monetary uses. Examples: Gold, silver, cigarettes Fiat Money: something that serves as money but has no other important uses. Examples: Coins, currency, debit cards
Image of page 5

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

View Full Document Right Arrow Icon
Principles of Macroeconomics: Ch 10 Canadian Edition Money in the Canadian Economy Money Stock is the quantity of money circulating in the economy. Different ways of measuring the money stock in the economy: M1 M2
Image of page 6
Principles of Macroeconomics: Ch 10 Canadian Edition The most familiar forms of money used include: Currency Demand Deposits: balances in banks that depositors can access on demand by writing a check or using a debit card. Measurement of Money M 1
Image of page 7

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

View Full Document Right Arrow Icon
Principles of Macroeconomics: Ch 10 Canadian Edition Measurement of Money A broader measure of money than M 1, includes: M1 +Savings Deposits +Personal Term Deposits M 2
Image of page 8
M1 and M2
Image of page 9

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

View Full Document Right Arrow Icon
Principles of Macroeconomics: Ch 10 Canadian Edition Where is All The Currency? In 2006 there was about $46 billion of Canadian currency outstanding ($1,797 in currency per adult). Banks and companies hold some. The outstanding currency may be in the hands of tax evaders, drug dealers and other criminals.
Image of page 10
Money Debit cards are money. Like cheques, they allow direct access to money.
Image of page 11

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

View Full Document Right Arrow Icon
Image of page 12
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern