BUSAD 120 Chapter Notes - Chapter 1: Fiat Money, Stock Market Crash, Money Supply
Document Summary
Caused by events that shift the ad and/or. Determine whether the event shifts ad or as. Use ad as diagram to see how the shift changes y and p in the short run. Use ad as diagram to see how economy moves from new sr eq"m to new lr eq"m. Sras shifts right, until lr eq"m at c. The quantity of money available in the economy is called the money supply. Fiat money is inconvertible paper money made legal tender by a government decree. Basically, fiat money consists of two things: Currency: the plastic/paper notes and metal coins in the hands of the non-bank public (cp). Current deposits: balances in bank accounts that depositors can access on demand by using cards (credit or debit) or writing a cheque (d). Money supply ms = cp + d. Various measures of the money supply: m0, m1, m2, m3 up to broad money.
