ECON 201 Study Guide - Fractional-Reserve Banking, Federal Reserve System, Commodity Money

• School: University of Maryland
• Department: Economics
• Course: ECON 201
• Professor: all

Document Summary

Chapter 13: saving, investment, and the financial system. These notes more closely follow the book but also lecture notes. 3. interest rate is the price of a loan: amount that borrowers pay for loans and amount lenders receive on their, nominal interest rate is usually reported, real interest rate=nominal ir inflation rate, more accurately reflects return to saving and cost of saving borrowing, model depends on real interest rate, policy 1: saving incentives. Public saving (negative: alters behavior of households and firms discouraged and quantity demanded decreases fall in investment, crowding out: a decrease in investment that results from gov"t borrowing, when the government reduces national saving by running a budget demanders are deficit, the interest rate rises and investment falls. Money refers to assets people use to buy goods and services. Medium of exchange--provides item used to make transactions. Unit of account--provides the way in which prices and other economic.