Download - Money
![Page 1: Money](https://reader036.vdocuments.us/reader036/viewer/2022083006/56813ac1550346895da2d0b1/html5/thumbnails/1.jpg)
Money
• Definition• Uses
• Medium of exchange• Unit of Account (“numeràire”)• Store of value
• Measuring money (M1, M2, …)
![Page 2: Money](https://reader036.vdocuments.us/reader036/viewer/2022083006/56813ac1550346895da2d0b1/html5/thumbnails/2.jpg)
Financial intermediaries
• Firms that manage the flow of financial funds from households and firms to other households and firms.• Commercial banks• S&L’s• Savings Banks and Credit Unions• Money Market Mutual Funds
![Page 3: Money](https://reader036.vdocuments.us/reader036/viewer/2022083006/56813ac1550346895da2d0b1/html5/thumbnails/3.jpg)
Money and Banking
• Liabilities + Net worth = Assets• (deposits + owner’s equity = loans
made)• deposits = reserves + loans made• reserves = vault cash + FRB
account
![Page 4: Money](https://reader036.vdocuments.us/reader036/viewer/2022083006/56813ac1550346895da2d0b1/html5/thumbnails/4.jpg)
Economic functions of financial intermediaries
• Create ‘liquidity’• Minimize the ‘cost of obtaining
funds’• Minimize the ‘cost of lending
funds’• Pooling risks in order to maximize
profits
![Page 5: Money](https://reader036.vdocuments.us/reader036/viewer/2022083006/56813ac1550346895da2d0b1/html5/thumbnails/5.jpg)
Regulation
• Deposit insurance• FDIC, BIF, SAIF
• Balance sheet rules• capital requirements• reserve requirements• deposit rules• lending rules
![Page 6: Money](https://reader036.vdocuments.us/reader036/viewer/2022083006/56813ac1550346895da2d0b1/html5/thumbnails/6.jpg)
Money “creation”
• The deposit-loan-reserve chain.
![Page 7: Money](https://reader036.vdocuments.us/reader036/viewer/2022083006/56813ac1550346895da2d0b1/html5/thumbnails/7.jpg)
Short term AD - AS efffects
• Shifts AD right or left
![Page 8: Money](https://reader036.vdocuments.us/reader036/viewer/2022083006/56813ac1550346895da2d0b1/html5/thumbnails/8.jpg)
Long term AD - AS effects
• Shift of the SAS right of left