Additional_MoneyInflation

Additional_MoneyInflation - Money and Inflation Types of...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Money and Inflation Types of Money: Commodity Money made out of goods like gold Fiat Money money used by government fiat.
Background image of page 1

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

View Full DocumentRight Arrow Icon
2 Monetized Economy: an economy where money is used. - barter very inefficient Origin of Banks Originally places to store commodity money. Bankers realized that they could lend out the money to earn interest.
Background image of page 2
3 The Uses of Money Medium of Exchange Store of Value Unit of Account Commodity Money: supply controlled by the industry producing the good. Fiat Money: supply essentially controlled by the Federal Reserve Board.
Background image of page 3

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

View Full DocumentRight Arrow Icon
4 Definitions of Money M1: currency, checkable deposits, traveler’s checks. M2 = M1 + Additional Deposits (Time and Savings) Both can be controlled by the Federal Reserve Board.
Background image of page 4
5 Banks and the Fed Creating Money Balance Sheet: lists assets and liabilities. Bank Assets Liabilities Checkable Deposits Loans Bonds Vault Cash Fed Deposit
Background image of page 5

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

View Full DocumentRight Arrow Icon
Reserves = Vault cash + Fed Deposit Reserve Requirement: fraction of checkable deposits that must be held as reserves. Example:
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 21

Additional_MoneyInflation - Money and Inflation Types of...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online