Chapter 13 The Role Of Money In The Macro Ecomony
The Role of Money in the Macro
Ecomony
Chapter 13
What is Money?
The
stock of financial assets that can easily be used to make market transactions and that serves as a medium of exchange, a unit of account, and a store of value.
2
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Measures of the U.S. Money Supply
MEASURE
DESCRIPTION
VALUE (JAN 2008)
SEAS. ADJ. (BIL. $)
Coins held outside the Treasury, the
Federal Reserve banks, and depository institutions, as well as paper money—Federal
Reserve notes
758.0
Checkable deposits
Deposits in checking accounts
(demand deposits)
292.5
Travelers’ checks
Checks that can be used as cash issued by nondepository institutions such as American
Express
Other checkable deposits
Negotiable orders of withdrawal
(NOWs) and automatic transfer service (ATS) account balances
C: CURRENCY
M1: C PLUS:
3
Total M1
6.2
307.9
1,364.6
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Measures of U.S. Money Supply
MEASURE
DESCRIPTION
Total M1
VALUE (JAN 2008)
SEAS. ADJ. (BIL. $)
1,364.6
M2: M1 PLUS:
4
Money market mutual fund shares Shares of funds that invest in short-term financial assets and have check-writing privileges
1,006.1
Savings accounts
Interest-bearing accounts with no checking privileges
3,903.2
Small time deposits
Accounts of less than
$100,000, such as certificates of deposit, that have fixed maturities and penalties for early withdrawal
1,224.5
Total M2
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
7,498.3
Depository Institutions
Depository
institutions are institutions that accept deposits from individuals and organizations, against which depositors can write checks on demand for their market transactions and that use these deposits to make loans.
5
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Fractional Reserve Banking
A banking
system in which banks are required to keep only a
Ecomony
Chapter 13
What is Money?
The
stock of financial assets that can easily be used to make market transactions and that serves as a medium of exchange, a unit of account, and a store of value.
2
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Measures of the U.S. Money Supply
MEASURE
DESCRIPTION
VALUE (JAN 2008)
SEAS. ADJ. (BIL. $)
Coins held outside the Treasury, the
Federal Reserve banks, and depository institutions, as well as paper money—Federal
Reserve notes
758.0
Checkable deposits
Deposits in checking accounts
(demand deposits)
292.5
Travelers’ checks
Checks that can be used as cash issued by nondepository institutions such as American
Express
Other checkable deposits
Negotiable orders of withdrawal
(NOWs) and automatic transfer service (ATS) account balances
C: CURRENCY
M1: C PLUS:
3
Total M1
6.2
307.9
1,364.6
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Measures of U.S. Money Supply
MEASURE
DESCRIPTION
Total M1
VALUE (JAN 2008)
SEAS. ADJ. (BIL. $)
1,364.6
M2: M1 PLUS:
4
Money market mutual fund shares Shares of funds that invest in short-term financial assets and have check-writing privileges
1,006.1
Savings accounts
Interest-bearing accounts with no checking privileges
3,903.2
Small time deposits
Accounts of less than
$100,000, such as certificates of deposit, that have fixed maturities and penalties for early withdrawal
1,224.5
Total M2
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
7,498.3
Depository Institutions
Depository
institutions are institutions that accept deposits from individuals and organizations, against which depositors can write checks on demand for their market transactions and that use these deposits to make loans.
5
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Fractional Reserve Banking
A banking
system in which banks are required to keep only a