ECON 150C1 Study Guide - Final Guide: Bear Stearns, Debit Card, Money Supply

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Used as a medium of exchange, store of value, and unit of account. The federal reserve is a last resort option to banks, but will help failing banks in need. Not easy to abuse but also not easy to control the supply. Operational: clear checks, make discount loan decisions, regulate banks within the district. The federal reserve has billions of dollars in its basement. When banks get more money, they lend it out to others. Borrowing to live caused the housing bubble to burst. The amount of money you want to own depends on: *a responsible person doesn"t take out money that they know they can"t pay back. Many people wanted to be homeowners because of how cheap it was to buy a home, but it was difficult to sell because of the downfall in the housing market. Nobody wanted to take out a loan on a house because of the stagnant growth in jobs and money.

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