ECO 1102 Lecture Notes - Lecture 9: Capital Requirement, Overnight Rate, Openmarket

• School: University of Ottawa
• Department: Economics
• Course: ECO 1102
• Professor: Octavian Strimbu

Document Summary

Eco1102 - lecture 9 - the monetary system. Money is the set of assets in the economy that people regularly use to buy goods and services from other people. Money includes only few types of wealth that are regularly accepted by sellers in exchange for goods and services. Wealth includes both monetary and nonmonetary assets. Medium of exchange is an item buyers give to sellers to purchase goods or services. Sellers are willing to accept this item in a transaction. People are confident that sellers will be willing to accept it in exchange for something. Unit of account is the yardstick that people use to post prices and record debts. If you take out a loan from a bank, the size of your future repayment will be measured in dollars, not in a quantity of goods and services. Store of value is an item that people can use to transfer purchasing power from the present to future.