ECON 101 Chapter Notes - Chapter 14: Federal Open Market Committee, Open Market Operation, Legal Tender
Document Summary
Functions of money: medium of exchange, used to buy/sell goods, unit of account, goods valued in dollars, store of value, hold some wealth in money form, money is liquid. Money definition m1: m1, currency, checkable deposits, institutions offering checkable deposits, commercial banks, savings and loan associations, mutual savings banks, credit unions. Money definition m2: m2, m1 plus near-monies, savings deposits including money market deposit accounts (mmda, small-denominated time deposits, money market mutual funds (mmmf) Federal reserve functions: issue currency, set reserve requirements, lend money to banks, collect checks, act as a fiscal agent for u. s. government, supervise banks, control the money supply. Federal reserve independence: established by congress as an independent agency, protects the fed from political pressures, enables the fed to take actions to increase interest rates in order to stem inflation as needed. Post-crisis u. s. financial services: major categories of financial institutions. Investment banks: wall st. reform and consumer protection act.
