ECO 212 Federal Reserve Paper

ECO 212 Federal Reserve Paper - Federal Reserve Federal...

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Federal Reserve 1 Federal Reserve Author ECO 212 July 25, 2010 Instructor
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Federal Reserve 2 Federal Reserve The Gross Domestic Product (GDP) is a calculation that provides insight into the current economy of our nation to allow individuals to understand the current and past year’s standings in the economy. The calculation of the GDP allows for the government to determine what adjustments are necessary to manage an effective status for the economy. Based upon the GDP the government can forecast any necessary changes that must be made to either the monetary policy or the fiscal policy. The wealth of a country is based upon the government’s ability to manage the economy through the monetary system and not on the amount of money that is located within that economy. The calculations for the GDP are produced to provide the most accurate totals that can result in a smooth transition for the financial market which allows the government the necessary time needed to react to a recession. Purpose and Function of Money The purpose of money is to act in an economy as an asset which allows consumers to trade for a product or services. Money includes four functions: to work as a medium of exchange, a unit of account, a store of value, and a standard of deferred payment (Hubbard & O’Brien, 2010). When used in international transactions money also results in a trade that is
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This note was uploaded on 01/05/2012 for the course 101 melissa jo taught by Professor Acc101 during the Spring '11 term at Aarhus Universitet.

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ECO 212 Federal Reserve Paper - Federal Reserve Federal...

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