MONEY SUPPLY Reference 10.2

Money Supply is the total of money in circulation 1.Currency – bills and coins federal reserve notes 2.Checking Accounts demand deposits 3. Traveler’s Checks

M1 $2,149,200,000,000 October 2011 Nov $ 2,418,400,000,000

M2 M1 + “near-money” Passbook savings account Short term time deposit accounts 24 hr money market funds Near-money cannot be used as a medium of exchange, but it can be quickly converted to cash. $9,606,500,000,000 Nov $10,163,500,000,000

Are credit cards money? No, because you must pay the credit card company back for the use of their money. You can use a credit card as medium of exchange But you can’t use it as a repayment of debt. You use it to incur debt. Definition of money: any good widely accepted for exchange and in the repayment of debt. Money is a store of value.

10.2 Money Supply p Read and complete Section Review #1d,f-4 The Federal Reserve SystemHomework: 11.1 “The Federal Reserve System” –Read and complete Section Review #1-4 p. 292