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Chapter Money & Banking 14
Objectives: ,[object Object],[object Object],[object Object],[object Object]
Types of Money ,[object Object],[object Object],[object Object],[object Object],[object Object]
 
Roles of Money: ,[object Object],[object Object],[object Object]
What makes Money Valuable? ,[object Object],[object Object],[object Object],[object Object],[object Object]
 
The Money Supply M1 + M2 + retirement accounts and other assets that are difficult to convert to cash Even less liquid M3 M1 + savings accounts Broader measure M2 Currency in circulation and traveler’s checks Transactions money-liquid assets M1 Example Definition Type of Money
How Banks Work Banks use your deposited money to make loans
Simple Money Multiplier: = Deposit Required Reserve SMM SMM x Excess Reserve = $
SMM Example: = $100 20 5 5 x $80 = $400

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Econ Ch14 Money & Banking

  • 1. Chapter Money & Banking 14
  • 2.
  • 3.
  • 4.  
  • 5.
  • 6.
  • 7.  
  • 8. The Money Supply M1 + M2 + retirement accounts and other assets that are difficult to convert to cash Even less liquid M3 M1 + savings accounts Broader measure M2 Currency in circulation and traveler’s checks Transactions money-liquid assets M1 Example Definition Type of Money
  • 9. How Banks Work Banks use your deposited money to make loans
  • 10. Simple Money Multiplier: = Deposit Required Reserve SMM SMM x Excess Reserve = $
  • 11. SMM Example: = $100 20 5 5 x $80 = $400