ECON 2010 Chapter Notes - Chapter 9: Monetary Policy, Openmarket, Bitcoin
Document Summary
Chapter 9 (cid:862)money, prices, and financial intermediaries(cid:863) eco(cid:374) (cid:1006)(cid:1004)(cid:1005)(cid:1004) macroeco(cid:374)o(cid:373)ics. The term money in economics has a specific meaning different from every day use. To an economist: your paycheck is income, the income you don"t spend is saving, the increase in the value of your stock is a capital gain, when your house appreciates, your wealth increases. A successful economy allocates its saving to the most productive investments. The interest on deposits is one important reason people put their saving in banks. Banks gather information about potential investments: evaluate the options, direct saving, service provided to depositors. Banks provide access to credit for small businesses and homeowners: may be the only source of credit for some investments. When banks make loans, they earn interest which, in turn, is paid to the bank"s depositors. Having bank deposits makes payments easier: checks, atms, debit card. Checks and debit cards are safer than cash. Banks provide a record of your transactions.