Lecture 17 Money and Banking

Lecture 17 Money and Banking - What is money? Money Assets...

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What is money? Money Assets that people are generally willing to accept in exchange for goods and services or for payment of debts. Asset Anything of value owned by a person or a firm. The Functions of Money: 1) Medium of exchange: sellers are willing to accept it in exchange for goods or services. 2) Unit of account: in a barter system, each good has many prices. 3) Store of value: i f you do not use all your dollars to buy goods and services today, you can hold the rest to use in the future. 4) Standard of deferred payment: can serve as a standard of deferred payment in borrowing and lending.
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How is Money Measured? M1: The narrowest definition of the money supply M1 includes: 1) Currency , which is all the paper money and coins that are in circulation, where “in circulation” means not held by banks or the government. - Monetary Base (MB) = Currency + Reserves held by commercial banks. 2) The value of all
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Lecture 17 Money and Banking - What is money? Money Assets...

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