EC140 Chapter Notes - Chapter 27: Excess Reserves, Reserve Requirement, Commercial Bank
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EC140 Full Course Notes
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Document Summary
Largest element of the canadian money supply- bank deposits. Barter: a system in which goods and services are traded directly for other goods and services. Gresham"s law: the theory that bad, or debased, money drives. If you have ugly money you"d wanna give it away first. Bank notes: paper money issued by commercial banks. When there are more outstanding claims against them than they actually have in reserves available to pay those claims. Gold standard- a currency standard whereby a country"s currency is convertible into gold at a fixed rate of exchange. Fiat money: paper money or coinage that is neither backed by nor convertible into anything else but is decreed by the government to be legal tender. Deposit money: money held by the public in the form of deposits with commercial banks. Banks create money by issuing more promises to pay (deposits) than they have cash reserves available to pay out.
