23115 Lecture Notes - Lecture 9: Reserve Requirement, Debit Card, Market Liquidity
Document Summary
The costs and causes of inflation: what money is and what functions money has. Money = set of assets in an economy that people use to guy g/s. Medium of exchange item buyers give to sellers when purchasing. Unit of account yardstick people use to post prices & record debts. Store of value item people can use to transfer purchasing power. Wealth is not a medium of exchange (can be stores of value though) Money is the most liquid asset but far from perfect as a store of value. Commodity: historical form (has intrinsic value e. g. cigarettes) Fiat: money without intrinsic value (used due to government decree) Seller is obliged to accept it (money only has one use) Currency: plastic notes and metal coins in the hands of public. Current deposits: bank accounts balances that depositors can access on demand using a debit card or writing a cheque (part liquid: money and the banking system.
