ECON 1010 Final: Final Exam Note
Document Summary
Money- commodity or token acceptable as means of payment. Barter- direct exchange goods, double coincidence of wants (costly) Medium of exchange- accepted in exchange for goods/services. Unit of account- measure for stating the prices. Store of value- money held later for exchange. Currency- bank notes, coins, deposits (cheques are only instructions to bank/credit cards are not money) Depository institution- takes deposits from households/firms and loans others. Goal to max wealth, interest rate it lends exceeds interest rate it pays on deposits. 4 benefits: liquidity, pool risk, lower cost of borrowing, monitoring borrowers. Chartered banks- private firm chartered under bank act of 1992 to receive deposits/make loans. Credit unions- operates under cooperative credit association act, receives deposits/loans. Types of assets (depositors funds: reserves- cash + deposits at bank of canada, liquid assets- govn treasury bills (chequing deposit, securities- long term govn bonds, mortgage-backed securities, loans- fixed amount of money for agreed-upon periods of time.
