ECON 1BB3 Chapter Notes - Chapter 12-13: Canada Deposit Insurance Corporation, Excess Reserves, Life Insurance

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ECON 1BB3 Full Course Notes
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ECON 1BB3 Full Course Notes
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Money: something regularly used to buy goods and services: not income or wealth. Barter: trading goods for goods: has to be double coincidence of wants, both parties want what the other has at the same time. Unit of account: how we track prices. Commodity money: money that is also commodity with intrinsic value: ex. Fiat money: used only as money, dictated by government decree. Representative: bank notes that can be exchanged for specific commodity. Seigniorage: difference between face value and cost of supplying money, profit from issuing money. Token money: money whose face value exceeds cost. C = currency in hands of the public, not in banks. Liquidity: ease with which asset can be converted to medium of exchange. When price level rises, value of money decreases. Fractional reserve banking: system in which banks hold only fraction of deposits as reserves. 100% reserve banking: system in which banks hold all deposits as reserves.

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