ECON 2H03 Lecture Notes - Lecture 9: Fisher Hypothesis, Commodity Money, Money Supply

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Money is the stock of assets that can be readily used to make transactions. The dollars (or other currency) in the hands of the public make up the nation"s stock of money. It can also be defined as anything that is generally accepted as a medium of exchange. Medium of exchange: we use it to buy stuf. Unit of account: transfers purchasing power from the present to the future, usually can maintain 90% of value, the common unit by which everyone measures prices and values. Fiat money: has intrinsic value, examples: paper currency, currency, deposits in chequing accounts, and certificates of deposit are (as long as it"s after the time restriction, note that cheques are not money and neither are credit cards. Commodity money: has intrinsic value, examples: gold coins and cigarettes in prison. The money supply is the quantity of money available in the economy. There are three players: the central bank (bank of canada)

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