1. Warm-Up
Draw a correctly-labeled graph showing potential output and equilibrium price and output for:
Long-run equilibrium
Recessionary gap
Inflationary gap
Identify which gap is likely to occur as a result of the shutdown.

2. Money
Chapter 30: Money, Banking and the Federal Reserve System (pages )

3. Roles Money Plays Medium of Exchange Store of value
Used to buy/sell goods
Makes trading easier
Eliminates need to barter
Store of value
Lasts over time
Get paid now and spend later

4. Roles Money Plays Unit of Account Tells how much goods are worth
Stated in terms of currency and not other goods

5. Good For Money or No? Item Medium of Exchange? Store of Value?
Unit of Account?
Salt 
Cattle
Gold 
Copper coins
Beaver pelts
Personal checks
Debit card
Credit card
$100 bill

7. Item #1 – iPhone 7

8. Item #2 – Chipotle for Life

9. Item #3 – World Series Tickets

10. Brain Break Who appears on the: $1 bill $2 bill $5 bill $10 bill
Penny
Nickel
Dime
Quarter
Half-Dollar

11. Why Gold?

12. Money Supply M1  Currency in circulation M2  M1 + “near monies”
Cash, checks, traveler’s checks
Most basic definition
M2  M1 + “near monies”
Savings, CDs, money markets
More expansive definition

13. M1 + Savings + Money Market + CDs
Money Supply M2
M1 + Savings + Money Market + CDs M1
Checks + Cash

14. Calculating M1 and M2
Use the data below to calculate M1 and M2 (assume anything not mentioned = $0)
Items
Amount
Checkable deposits
$850
Currency
$200
Large time deposits
$800
Non-checkable savings deposits
$302
Small time deposits
$1,745

15. Calculating M1 and M2 M1 = $850 + $200 = $1,050
Items
Amount
Checkable deposits
$850
Currency
$200
Large time deposits
$800
Non-checkable savings deposits
$302
Small time deposits
$1,745
M1 = $850 + $200 = $1,050
M2 = M1 + $302 + $1,745 = $3,097