IT 1081C Lecture Notes - Lecture 2: Barter, Open Market Operation, Commercial Bank
Document Summary
3. 2 supply of money- currency held by the public and net demand deposits held by commercial banks. 3. 4 central bank and its functions (example of the reserve bank of india) bank of issue, Government bank, bankers bank, controller of credit through bank rate, crr slr repo rate, reverse repo rate open market operations and margin requirement. Anything which is generally acceptable by the people in exchange of goods and services or in repayment of debts is called money. Direct exchange of goods against goods without the use of money is called barter exchange. An economy based on barter exchange is called cc economy. However as transactions increased inconveniences increased involving rising trading costs. Trading costs are costs of engaging in trade. It has 2 components and they are search cost and disutility of waiting. Lack of double coincidence of wants: the simultaneous fulfillment of mutual wants by buyers and sellers is known as double coincidence of wants.
