ECON 2105 Lecture Notes - Lecture 7: Primary Dealer, Reserve Requirement, Consumer Protection
1 Mar 2017
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Econ 2105 - lecture 7: money, banks, and the federal reserve. Money: that which is accepted in payment for goods & services and to settle debts. Consists of: currency: dollar bills and coins, balance in your checking account. Using money as a measuring stick; money is used as a unit of account: income, wealth (value, debt. Uses of money: medium of exchange, avoids the costly and time consuming process of barter. Often referred to as cash equivalents : on the balance sheets of firms, this mutual fund has 40 percent in cash, cash is referring to t-bills or similar corporate securities. T-bills and similar corporate securities are called the money market : money market. Examples: metals (copper, silver, gold = best commodity money), cigarettes (in prisoner-of- war camps), cattle. Qualities of good commodity money: durable, valuable in small sizes and weights, divisible into varying sizes, easily verifiable, stable in value.
