ECON 102 Lecture Notes - Lecture 20: Demand Deposit, Time Deposit, Debit Card
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Econ 102 lecture 20 money and banking con"t: money supply. Money supply = currency (cash) + ?bank? deposits: kinds of deposits i. Demand deposit: withdraw on demand, i. e. no notice, low interest ii. Savings deposit: notice of withdrawal required, higher interest iii. Term deposit: nowadays, easy to transfer funds from all accounts, today, term deposits distinguish notice accounts that pay higher term interest (interest reduced in withdrawn early, definitions of the money supply. H = high powered = cash in public c + cash in reserve r i: m1 = currency in circulation + demand deposits at chartered. Note: m2"s - used by boc to control inflation: near money and money substitutes i. ii. iii. If medium of exchange function important, then m1b. If store of wealth important, use deposits that pay higher returns but are not chequable, e. g. m2 or m2+ or m2++