ECON2030 TEST 4 - CHAPTER 13 Monetary policy is changes in...

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CHAPTER 13 Monetary policy is changes in the nominal interest rate and the money supply ( this is ultimately in the hands of the treasury and the federal reserve system FED) Policy tools- open market operations, discount policy, and reserve requirements Goals- price stability, high employment, stability of financial markets and institutions, economic growth Fiscal policy- changes in the government spending and changes in taxation (ultimately in the hands of congress) Money is anything that is generally accepted for exchange for goods and services Asset- anything of value owned by a person or firm Commodity money- good used as money that also has value independent of its use of money (gold, animal skin) Fiat money- has value because we accept it Functions of money: -medium of exchange-sellers are willing to accept it in exchange for goods and services -unit of account-measures value in terms of money - store of value -standard of deferred payment We want money to be easily divisible Money supply is how much money is available to be spent today M1= most narrow measurement of money supply M1= all currency + value of all checking account deposits + value of all travelers checks M2= broader definition of money M2= M1 + savings account balances + small denomination time deposits + balances in money
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This note was uploaded on 01/19/2012 for the course ECON 2030 taught by Professor Thomassen during the Summer '08 term at Auburn University.

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ECON2030 TEST 4 - CHAPTER 13 Monetary policy is changes in...

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