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Published bysabina mukasheva Modified over 6 years ago
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Mukasheva S Shokubasova A
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Money is the set of assets in the economy that people regularly use to buy goods and services from each other
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- a medium of exchange Item that buyers give to sellers. (When they want to purchase goods and services) - a unit of account Yardstick people use to post prices and record debts. (When we want to measure and record economic value, we use money as the unit of account) - a store of value Item that people can use to transfer purchasing power from the present to the future.
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commodity money - money that takes the form of a commodity with intrinsic value intrinsic value - means that the item would have value even if it were not used as money gold standard - when an economy uses gold as money (or uses paper money that is convertible into gold on demand) fiat money - money without intrinsic value that is used as money because of government decree
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Money stock
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Federal reserve (Fed) -the cenral bank of the US Central bank -Institution designed to oversee the banking system regulate the quantity of money in the economy
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FOMC - 7 members of the board of governors - 5 of the twelve regional bank presidents *all twelve regional presidents attend each FOMC meeting, but only five get to vote - Meets about every six weeks in Washington, D.C. - Discuss the condition of the economy - Consider changes in monetary policy
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Fed’s primary tool: open market operation - Purchase & sale of US government bonds FOMC – increase the money supply - The Fed: open market purchase FOMC – decrease the money supply - The Fed: open market sale
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