ECON 101 Lecture 3: Unit 3 SG
Document Summary
Unit 3 sg: money, functions of money (>physical nature) i. Medium of exchange buy things: decrease transaction costs, eliminates bartering, specialization of trade, store of value. Ipo, stock evaluations: *investment and commercial banks have merged in the last 10 years with repeal of. Important because fiat currency: maintains public"s faith in the currency. Increase reserve rate decrease money multiplier decrease excess reserves. If the public holds money money creation is less because there is less re-deposited. If banks hold er money creation is less because less money is lent. Increase output without inflationary pressure: keynesians like fp because government set and demand, savers and investors are different, business may not borrow, public may save, banks can hold er or money put to work (securities) d. Increase reserve requirement, increase discount and federal funds rate, open market sale of bonds: om sale turns excess reserves into securities and sucks reserves out of banking d.
