Money, Banks, the Fed and Monetary Policy Review
1. Money is:
paper money and coins, but not checks.
currency and stocks.
anything that can easily be used to buy goods and services.
not represented by any of the above.
Comparative and Absolute Advantage Worksheet
1. If they bake only cakes, then in a single day George can bake 10 cakes while Greta can bake 5
cakes. If they only make pies, then in a single day George can bake 10 pies while Greta can bake
Demand schedule: how much of a good you would buy at different prices
Quantity demanded: is the actual amount demanded at one specic price
Demand curve: graph of the whole demand schedule
Law of dem
The Fed's control of the money supply
Federal Funds Market
If a bank does not have sufciant reserves it can borrow from other
banks via the federal funds market
Current interest rate is .25
rate of interest the Fed charges on loans to ba
Module 23: The Definition and Measurement of Money
What is money?
In what way (or
Gov has two things taxing and spending
Mandatory spending cannot be controlled
Gov directly controls
Government has decits in times of recession and surpluses in times of
Government is self stabilizing as discretionary
Youve now learned how we define money, its
reasons for usage and the differing ways we classify it
(M1 and M2).
Now, I ask this: Why do we even hold money in our
wallets? Interest Rates and the Opportunity Cost of
June 2007 June 2008
The Market for Loanable Funds
Definition: a hypothetical market that examines the