Economics 1022A/B Chapter Notes - Chapter 24: Bank Reserves, Credit Union, Loanable Funds

• School: Western University
• Department: Economics
• Course: Economics 1022A/B
• Professor: Emilie Mc Hugh Rivers

Document Summary

Money: any commodity or token that is generally acceptable as a means of payment. Means of payment: a method of settling a debt. When payment has been made, there is no remaining obligation between the parties to a transaction. Money consists of: currency and deposits at banks and other depository institutions. Currency: the notes and coins held by individuals and businesses. Convenient for settling small debts and buying low priced items. Deposits of individuals and businesses at banks and other depository institutions are counted as money. M1: currency held by individuals and businesses + chequable deposits owned by individuals and households. M2: m1 + all other deposits (non-chequable deposits and fixed term deposits) held by individuals and businesses. Depository institution: financial firm that takes deposits from households and firms. Chartered bank: private firm, chartered under the bank act of 1991 to receive deposits and make loans. Conduct all types of banking and financial business.