Lecture_Notes_12_and_13 - THEMONEYECONOMY Money and the...

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THE MONEY ECONOMY Money and the Monetary System CHAPTER 12  13
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12.2 THE MONETARY SYSTEM The monetary system consists of The Federal Reserve The banks and other institutions that accept deposits and that provide the services that enable people and businesses to make and receive payments.
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Figure 12.4 shows the institutions of the monetary system. The Federal Reserve regulates and influences the activities of the commercial banks, thrift institutions, and money market funds, whose deposits make up the nation’s money. 12.2 THE MONETARY SYSTEM
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12.2 THE MONETARY SYSTEM Commercial Banks: A commercial Bank is a firm that is licensed by the Comptroller of the Currency in the U.S. Treasury (or by a state agency) to accept deposits and make loans.
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12.2 THE MONETARY SYSTEM Thrift Institutions A savings and loan association (S&L) is a financial institution that accepts checkable deposits and savings deposits and that makes personal, commercial, and home-purchase loans. A savings bank is a financial institution that accepts savings deposits and makes mostly consumer and home-purchase loans. A credit union is a financial institution owned by a social or economic group, such as a firm’s
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12.2 THE MONETARY SYSTEM Money Market Funds A money market fund is a financial institution that obtains funds by selling shares and uses these funds to buy assets such as U.S. Treasury bills. Money market fund shares act like bank deposits. Shareholders can write checks on their money market fund accounts. There are restrictions on most of these accounts.
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12.3 THE FEDERAL RESERVE SYSTEM The Federal Reserve System The Federal Reserve System is the central bank of the United States. A central bank is a public authority that provides banking services to banks and regulates financial institutions and markets. The Fed conducts the nation’s monetary policy , which means that it adjusts the quantity of money in the economy.
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12.3 THE FEDERAL RESERVE SYSTEM Figure 12.7 shows the Federal Reserve districts. The nation is divided
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This note was uploaded on 06/21/2011 for the course ECON 201 taught by Professor Staff during the Spring '08 term at Northern Virginia Community College.

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Lecture_Notes_12_and_13 - THEMONEYECONOMY Money and the...

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