Find the magnitude of the torque about P if a 50-N force

ECON2105 April15,2016–April22,2016 Chapter17 Moneyisanassetgenerallyacceptedaspaymentforgoodsandservicesor repaymentofdebt. Beforemoney,peoplebartered(tradedgoodsdirectly).Thisisinefficientbecauseit requirestwopeopletowantsomething,meetup,andthendecideonaprice. MediumofExchange:promoteseconomicefficiencybyminimizingthetimespentin exchanginggoodsandservices;mustbeeasilystandardized,*widelyaccepted*, divisible,easytocarry,andnotdeterioratequickly. UnitofAccount:usedtomeasurevalueintheeconomy,astandardmeasurethatis easilyunderstoodbythoseinaneconomy. Example:IfIhaveagoatandwanttosellitfor$200,mostunderstandthat.If Ihaveagoatandwanttosellitfor4hammersand6chickens,thattakesa littlemoreeffort. StoreofValue:usedtosavepurchasingpower;mostliquidofallassetsbutloses valueduringinflation. Gettingpaidincashvs.Chick-fil-Asandwiches:youcanputthemoneyin yourwalletanduseitintwoweeks;cumbersomeandnothelpfulintwoweeks. CigaretteswereusedasmoneyduringWWII.Soldiersweregivenrationsandtrade becamedifficult;overtimethevalueofgoodscouldbedeterminedinanumberof cigarettes. TypesofMoney • CommodityMoney o Oldestform o Preciousmetalandothervaluablecommodities o Gold,silver,diamonds,etc. o Tooheavyandinconvenient • FiatMoney o PaperMoneyinitiallybackedbyabilitytoconverttocoinsorother metals o Backedbygovernmentguarantee o Example:U.S.money U.S.usedtohavea“GoldStandard”▯youcouldtradedollarsforgoldorsilver; wentawaywithNixon. Created By: Rachel Moore Not for redistribution. U.S.DollarsareprintedattheTreasuryattheBureauofEngravingandPrinting. TheyareactuallycalledFederalReserveNotes.Itcostsabout4.2centstoproducea dollarbill.Dollarbillsaremadeof25%linenand75%cotton,notpaper. U.S.MoneySupply: • M1=CashandCheckableDeposits(mostliquid) • M2=M1+Savings,Short-termCDs(certificateofdeposit),MoneyMarket Accounts(anythingthattakesalittletimetogetto) • M2isthebasenumberwhenlookingattheMoneySupply. Created By: Rachel Moore Not for redistribution. TheFederalReserveSystem • Resistancetoestablishmentofacentralbank o Fearofcentralizedpower o Distrustofmoneyedinterests(fearoflargebanksandcorporations manipulatingeconomy) • 1870–1907:U.S.had21financialpanics o Cropfailure▯loandefault o Loandefaultdamagedruralbank o Ruralbankwithdrewdepositsfromcitybank o Financialdifficultiesspread o Bank“runs” • Nolenderoflastreport • FederalReserveActof1913 **DECEMBER23,1913–FEDCREATED** • Structure o BoardofGovernors(7) ▯ ChairmanoftheBoardofGov:JanetYellen ▯ Appointedbypresident;approvedbytheSenate ▯ Currentlyonlyhave5peopleonBOGbecausenoonehas beenapprovedfor2openspotsduetoSenateapproval. o FederalReserveBanks(12) ▯ 9directorswhoappointFederalReserveBankPresident ▯ Semi-privateinstitution • TheBoardofGovernors o 14yearterm(non-renewable)becauselong-termchangesneedtobe seen. Created By: Rachel Moore Not for redistribution. o Whatdotheydo ▯ Overseethebankingandmonetarysystem ▯ Regulatebanks ▯ Approvebankmergers ▯ Setsreserverequirements ▯ Setsdiscountrate ▯ Votesinopenmarketoperations • MonetaryPolicyOperationstakeplaceintheNewYorkFederalReserve Bankonly. • TheGoldVaultislocatedintheNewYorkFederalReserveBank.Contains 250millionouncesofgold(over$85billionatcurrentmarketprices).10% ofallthegoldthathaseverbeentakenoutoftheground. • FederalOpenMarketCommittee(FOMC) o Theymeettodeterminethe(f.f.)federalfundstargetrate. o 12members:7boardofgovernorsand5federalreservebank presidents(rotatefrom12districts) o NewYorkFederalReserveBankPresidentALWAYSontheFOMC becauseittakesplaceintheNewYorkbank. o Use“openmarketoperations”asthemainmethodtoaffectthemoney supplyintheeconomy. o OpenMarketOperations:thebuyingandsellingofgovernment bondstoincrease/decreasetheavailablefundsintheeconomy; affectsbankreserves. ▯ Sellbonds▯decreasesthefunds/reservesintheeconomy ▯ Buysbonds▯increasesthefunds/reservesintheeconomy • TheFEDisinchargeofthemoneysupplyintheU.S.;thisisreferredtoas MonetaryPolicy. Chapter18 MoneySupply • Reserves:%ofdemanddepositsbanksarerequiredtohold;assume10%. • ExcessReserves=TotalReserves–RequiredReserves • Bankholdsreservesintheir“account”attheFederalReserveBanks o TheFEDpaysinterestonreservesheldattheFedBanks(likeyour bankdoesforyoursavingsaccount) Created By: Rachel Moore Not for redistribution. • Fractional-reservebanking:thepracticewherebyabankacceptsdeposits, makesloansorinvestments,andholdsreservesthatareafractionofits depositliabilities;thesmallerthereserverequirement,thegreaterthe multipliereffect(1/R) • BankscanalsoborrowdirectlyfromtheFEDatthediscountrate. Banksborrowfromeachotheratthefederalfundsrate. TheFederalFundsRateisamarketrate,buttheFEDinfluencesit. Asbothratesrise,borrowingbecomesmoreexpensive. Created By: Rachel Moore Not for redistribution. FederalReserveand2008 • Startedbuyingassetsotherthanshorttermtreasuries • Bought“MortgageBackedSecurities” • FederalFundsratewas“functionallyzero”sotheFEDadjusted. WhenBanksGoUnder Althoughthegraphlooksworseinthe1980s,theGreatDepressionpeakwasstill muchworsebecausetherewereveryfewinstitutions.Thepercentageof institutionsisnotshown,justtheactualnumber. Created By: Rachel Moore Not for redistribution. FDIC–FederalDepositInsuranceCorporation https://www.youtube.com/watchv=TAE8i40A5uI https://www.youtube.com/watchv=odPfHY4ekHA Created By: Rachel Moore Not for redistribution.