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GEO EXAM II STUDY GUIDE The Circuits of Capital : (Understand the three circuits of capital and the relations between them) Money Circuit- Money-Commodities- Labor and means of production. How money is gathered to create a product. Production Circuit- M-C- (L and MP) -----Production -----Commodity. The actual production of the commodity and the finished product Commodity Circuit- M-C- (L and MP) ---P----C---- Money. The stage were u market and sell the commodity to make a profit. It’s a cycle necessary to continue business and all stages must be successful. Money Circuit- What is money? Form- Credit, Debit and currency Use- payment, unit of account, quantitative state (shows worth), store of value, appreciates over time. Value changes (price of dollar), Facilitates exchange (universal equivalent for commodities) Banks- Deposits: liability on banks and pay interest on them. Credit: assets for bank, change interest on it. Example ( car company having a bank change interest rates on buyers). Profits: Made of interests, Credit is greater debit bc banks get more interest on credit This ignites a class struggle b/c bankers collect on credit interests (capitalists charging interest fees and additional fees to maximize worker) Instability of Banking- Banks never have enough cash on site if all their clients wanted their money back at once. ---would b considered a bank failure Fractional Revenues- a rule that an amount (around 10%) has to be on hand as a minimum to bay back depositors. Federal Deposit Insurance Corporation (FDIC)- agency that is used as a safe net to bail banks out. It ensures up to S100,000 if the banks cant pay back. Inflation: the increase in a products price level over the years. You could be paying different prices for the same product.
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-Causes: Consumer demands/ expansion, labor costs (unions creating high labor prices), profits, raw materials/energy: oil stocks of 70s drastic increase in price of oil or bankers fear inflation b/c it can erode money. Monetary Policy: Enacted through controlling interest rates and keeping inflation down. High interest rates = slow credit growth Low interest rates = credit expansion and economic act. -US Fed Reserve: “open market operations”- US FR buys bonds from banks to give them money. Nature of central banking; they create the money. Money Circuit - International Monetary Order International Gold Standard- 1900-1930s, GB hegemonic leader at time, gold was main currency for transnational system. Trade only done between elite class and central banks (ended b/c of depression). New monetary system created at end of 30s. Bretton Woods Regime- created as system that would allow for full employement and focused primarly on the domestic market. b/c of gold standard people fear of globalization. Was free trade but there was also a national policy of autonomy. US hegemonic leader. Created strict regulation of finance and global flows of capital. Dollar gold standard was 35$ per ounce. Post BWR- 1971-, globalization started, pure dollar standard. Floating exchange rates create
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This note was uploaded on 02/15/2012 for the course GEO 273 taught by Professor Gentry during the Spring '08 term at Syracuse.

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