Week 8. Wednesday
Week 8. Wednesday ECON 22061-001
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This 2 page Class Notes was uploaded by Marissa McKinney on Wednesday October 21, 2015. The Class Notes belongs to ECON 22061-001 at Kent State University taught by Dandan Liu (P) in Summer 2015. Since its upload, it has received 23 views. For similar materials see Principles of Macroeconomics in Economcs at Kent State University.
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Date Created: 10/21/15
Chapter 16 Wed 1021 What money is and why it s important They must like your goods and you must like theirs Now easier because we have money which is accepted by everyone History of monev Fiat money what we use today Commodity money can be used in other ways besides money 3 functions of money Medium of exchange ex using money to buy a bottled water Unit of account dollars Ex I have 100 of debt on my credit card Store of value if you put your money in your wallet or in the bank It will keep its value until you are ready to use it Ex saving money to buy something else The money supply Currency the money you have in your pocket Demand depositsthe money you have in your checking acct not in a savings Measures of the us money supply need to know M1 the most liquid form of money Ex checks cash etc M2 bigger category m1 is a subset of m2 M1 plus all of your other money that is less liquid Savings accts money markets deposits etc Practice 1 a Yes is money b No Not money here but is money somewhere else c No But has store of value function could be used as a medium of exchange d No has medium of exchange but not the others Practice 2 a Yes b Yes c Yes d Yes Practice 2 number 2 C Practice 2 number 3 D Central banks and monetary policy Central bank regulates money supply Monetary policy deciding how much money we should have Should we increase or decrease the money supply And by how much Seems easy but the effect of the monetary policy on the economy is huge The structure of the fed Fomc federal open market committee