Essay about Econ a few notes

Econ Remarks 3:

Exam Thursday, 03 27th

Section 16: Cash

Money- utilized to purchase points

Weath- not money until converted into form that can be used to purchase things Liquidity- Purchasing electric power

Functions of Money: (515)

1 ) Medium of exchange

2 . Store of Value- can easily store this

3. Product of account - means of establishing comparative value

some. A Standard of Differed Payment- allows exchange over period of time

Our Funds

•Commodity Money- money which has value outside being used for funds •Fiat Money- No worth outside of becoming money (Every major currency)

Monetary Aggregates

•M1- ($2. 68 trillion) Currency, coins, checking account, travellers checks •M2-($11. 13 trillion) Everything in M1 plus sav acct, money mycket acct, cash mkt common funds, little CDs

Money Vs . Credit

•Debit card- Access to any money

•Credit card- Access to pre-arranged loan

1 ) Money in looking at and sav acct is definitely part of cash supply

installment payments on your When cash is deposited bank loans it out, not all of it

3. Bank keeps hold

5. Required arrange is volume of arrange bank must keep by law 5. Required hold ratio is amount since percent

•The smaller the necessary reserve proportion, the higher the amount of money supply •Excess Reserves- Cash that can be loaned but just isn't

Simple cash multiplier (222-228)

= (1/reserve requirement) x first amount deposited

-determines Money supply, which includes Original deposit

Money multiplier with currency

1 . Persons don't keep all profit bank

2 . Affects cash that can be made

3. Larger % people keep away as currency= smaller multiplier

(1+Percent retained as currency) / (Reserve requirement+Percent stored as currency) x first amount

Constraints on Funds creation:

1 . Deposits- deposits must be there

installment payments on your Willing borrowers- have to be persons interested in credit money three or more. Willing lenders- banks have to be willing to lend

Budgetary policy

Using money supply and interest levels to affect certain macroeconomic activity Conducted by government reserve

The fed (federal reserve)- central bank of us

It's task is too:

1 . governments financial institution

2 . Control and oversee commercial financial institutions

3. Control money source

4. Continue to keep prices manipulated and keep economy strong

Proven in 1913 to create assurance in our foreign currency and banking system Just before 1913 any person could produce money

The Given in a few Parts (529)

1 . Plank of governors- oversees 12 regional banking companies. In charge of economic policy and banking oversight 2 . 12 regional banks- involved in lender supervision

three or more. 7 associates Of board of governors and a few regional lender presidents- constitute federal available market panel

Who controls the fed?

1 ) President appoints 7 associates of panel of governors

2 . Leader approved by united states senate

3. Following being approved. That they don't require anyone's power to act 5. Provide studies to congress but does not report to our elected representatives

How can and does fed control money source (531)

Three ways fed increases Money source:

1 . Reducing Reserve requirment

2 . Shopping for bonds

3. Lowering goal for provided fund rate

Three ways provided decrease Funds supply:

1 . Increasing Book requirment

2 . Selling you possess

3. Incresing target for fed fund rate

1 . Setting hold requirement

Current reserve requirements:

If institution has fifth 89 m: 10%

Financial services regulating relief act(2006)= allowed provided to reduce need to zero Taking effect in 2011

installment payments on your Buying and selling a genuine (Open industry operations)

- buys improves supply

- sells reduce

Bond- IOU

•every year spend u percent of quantity borrowed

•pay Original quantity back after 10 years

•when US requirements money that they issue provides, not printing money

•When the price of a bond goes up, the rate it pays goes down. •When the price of a bond decreases, the rate it pays goes up. Musical instruments of economic policy;

1 . Open industry operations- selling and buying of government investments When the fed sells a bond

Given hands over IOU to financial institution

Amount of money to choose from is lowered

3....



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