ECN 204 Chapter 14: Chapter 14 Money, Banking, and Money Creation
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Document Summary
Liquidity is the ease with which it can converted quickly into the most widely accepted and easily spent form of money - cash - with little or no little loss of purchasing power. Money is a stock of some item or group of items (unlike income, which is a flow) The narrowest definition of the canadian money supply is called m1. Consists of two components: (a) currency - coins/paper money - outside chartered banks (b) all demand deposits - chequing accounts deposits in chartered banks. Token money - the value of the metal contained in the coin itself, is less than the face value of the coin. Prevents people from melting down the coins for sale as a commodity (the metal) Bank of canada notes - the paper money, is issued by the government owned central bank. The safety and convenience of cheques and debit cards have.