ECON102 Lecture Notes - Lecture 4: Money Supply

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ECON102 Full Course Notes
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ECON102 Full Course Notes
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Money consists of coins, banknotes, and chequable deposits. Currency(bank notes+coins) outside the banks + demand deposits located in chartered banks. Funds in accounting that can be removed without notice and usually pay little or no interest. M1 + personal savings deposits + term deposits and non-personal notice deposits. Bank deposits that typically earn a rate of return and require a stipulated amount of notice to be withdrawn, though rarely enforced. Bank deposits paying a market rate of return which are deposited for a fixed term and thus have limited liquidity. Take deposits and are ready to repay them in the short term. Make loans which can be rapid over longer periods of time. (ex. mortgage) Depository institutions are in the lending business. an occasional default can be. Households and firms need not search for a source, or many sources, for loans.

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