16466 Chapter Notes - Chapter 15: Ceteris Paribus, Monetary Policy, Monetary Base
Document Summary
Economics for today the monetary & financial system chapter 15. Key points: what makes money money", other desirable properties of money, the demand for money, four money supply definitions, the equilibrium interest rate, how monetary policy affects interest rates, prices, output and employment, a modern financial system. Other desirable properties of money: money must also be: Scarce, but not too scarce (the supply of money must be great enough to meet ordinary transactions needs, but not be so plentiful that it becomes worthless) Motives for holding money: transactions demand for money. The stock of money people hold to make everyday predictable expenses like making purchases or paying bills: precautionary demand for money, speculative demand for money. The stock of money people hold to pay for unpredictable expenses like unforeseen events. The stock of money people hold to take advantage of expected future price changes in the price of stocks, bonds or other non-money financial assets.
