EC250 Lecture Notes - Lecture 3: Real Interest Rate, Real Wages, Fractional-Reserve Banking
Document Summary
Blog notes: what did fed do last week. Did not change the interest rate but issued a guidance to what it would do in the future. Now waiting for further evidence to continue progress towards its objective. Inflation rate in canada is falling at 1. 1% Money: characteristics needed for a good to serve as money. Any asset that is used to intermediate exchange. Direct exchange/ barter: the good being sold was exchanged directly for the good being bought. Requires: double coincidence of wants: the selling needs to accept as payment what the buyer has to offer. Barter is manageable when only a few goods are traded, otherwise becomes cumbersome. Indirect exchange: exchange for something (cid:455)ou do(cid:374)"t (cid:449)a(cid:374)t (cid:271)ut (cid:272)a(cid:374) e(cid:454)(cid:272)ha(cid:374)ge to so(cid:373)eo(cid:374)e else. Commodity: goods that have value beyond their use of money- intrinsically useful. Fiat: money that does not have other uses - (cid:862)legal te(cid:374)der(cid:863) meaning the only institution that can issue canadian dollars is the bank of canada.
