Money and Banking

store of value. saving money.

changes all the time.

is best done by saving the money. If you want to store your value or reduce storage, you'll save it as money. In terms as money. To hold you savings. Savings account in the bank, IRA, saving bonds.

Purchasing something.

money helps us to purchase things.

same as means of payment. Most permanent use of money.

means price. Things in terms of money. Price of something, standard of value.

1. Medium of Exchange 2. Store of Value 3. Standard of Value

Money is what money does. Serves as a medium of exchange or means of payment.

dollar & coins

Has only one function. you can only buy with it. useful for buying things. to exchange. Anything which can buy something.

gold coins

paper (dollar)

Keep gold reserved against the money issues.

goes up and down

printing of money. control inflation. Created when somebody can use new money from having no money. Money is created by lending.

The price that you bear for buying things.

You pay more on everything. Happens when there's too much money in the market and there's no value. You pay the dollar and the actual value is less. The value of the money is less, you pay more for buying things. Value of the money is less.

are opposite to each other. The value of the money goes up & the other one goes down.

check. dollar. coin. credit card. You pay for something but you got no money. To pay bills, buy groceries, to pay rent.

pays off from your bank account.

doesn't work these days. We no longer have to exchange for things.

1. means of payment AKA medium of exchange. 2. store of value 3. Standard of value

They need it for day to day needs. Buy things, make payment, pay bills. To make purchases. Whether the interest rate is up or down.

Doesn't affect the demand.

an investment. When you buy a house, you need money but, that would depend of the interest rate.

depends upon the interest rate.

comes from people. Doesn't depend upon the interest rate. Both demands combined together.

Investments like buying a house or cars

Day to day needs or expenses.

people buy

people hold on

M1: currency in circulation plus checking account deposits M2: M1+savings deposits, small time deposits, and deposits in money market mutual funds

The Federal of Reserve. (They print the money)

Most liquid money. You can spend it right away. Currency (coins & bills) + demand deposits at banks + other checkable deposits (NOW accounts) at banks and at all other thrift institutions + travelers checks. Any bank is called M1. Child.

M1 + small-denomination time deposits + money market deposit accounts and passbook savings deposits at all depository institutions + money market mutual funds shares + bank overnight repurchase agreements and Eurodollars. M2 includes M1. Not as liquid as M1. You have to wait until the time matures and then you can spend it. Parent.

people who save money and don't get involved with the business. Saving banks. Time saving banks (saving bank gives you little interest) as compared to city banks (commercial bank doesn't give you interest)

Less than $100,000 for a fixed time period. CDs. It has to be a small amount of money. You can't spend it right away. You have to take the money and they will give you a penalty because it's fixed for a certain time.

It gives you the interest rate, whatever the money weight is. The interest rate changes according to the money market conditions.

Commercial banks and thrift institutions; financial institutions that accept deposits from the public

accounts sold to household customers in small denominations along with a small booklet or computer statement showing the account's current balance, interest earnings, deposits, and withdrawals

A company or a bank that takes money from you and invest for you. The mutual fund company lease the money for the other people. The people who don't like the interest rate (don't get anything) gives the money to the bank and they will invest it for them into shares, bonds and they will make money or lose money. Of course, it isn't for free. The company or bank that handles your money will charge you a fee. high/low funds. M2.

City bank and Chase bank. City bank has to pay 1 billion dollars to the people who had invested their money. They need money/cash. City bank then runs out of cash, and City bank go to Chase to borrow 1 billion dollars. City bank has to give the money back the next day because it only needs it for one night because tomorrow it is going to be alright. That's why it's called repurchase agreement. Tomorrow City bank will buy it back and give the 1 billion dollars back to Chase. Chase made interest and City is saved by Chase because it got bailed out. Works only overnight.

Part of the government. An agency which is given the power by the government by the law of constitution to provide us the money. They print the bills. Can increase or decrease money with the monetary policy and physical policy. Not allowed to print more money than it's already in the country. They can print money to replace the old bill but not new currency.

Notes Of Withdrawal. An agreement with the bank to withdrawal money once a week. Gives you little interest but they'll restrict you. You will not write a check as you please. For the people who want to make money in the market.

You can negotiate with the bank. You will write a check once a week and the bank will give you interest depending on the condition and the permit.

goes under M1. When you travel, you can give the money to the bank and they will issue you travel checks. If you lose it you can replace it. It's safe. Instead of carrying cash. If you want to pay, you pay with the check. You will not lose your money. You can spend it right away.

Included in M2.

When you give the money to the bank, they take the fee upfront. They'll take the money out right away.

When you give the money, the bank does not charge you money upfront but they'll charge you a little fee.

M2.It can be used as dollars.

Takes M2 and adds large cities. If you want to spend money, the bank will give you a very heavy penalty. Least liquid. It includes everything. The amount of money that we have in the country. Includes M1 and M2. Grand daddy.

Currency (coins & paper money) + Checkable deposits Currency/Total * 100=percent% Checkable deposits/Total * 100=percent%

Savings and MMDA + small time deposits + money market mutual funds Savings and MMDA/Total * 100=percent% small time deposits/Total * 100=percent% money market mutual funds/Total * 100=percent%

large time deposits/ENTIRE total * 100=percent%

the Senate.

fixed. You can't increase or decrease.

They print money as they please on different colored paper and size. They print money on the newspaper. The inflation rate is unbelievable.

day to day needs. Stays fixed. Doesn't depend upon interest rates. Straight line (on the graph) No matter what the interest rate is, it's going to be the same demand.

Where the demand of money & the supply of money intersect (on the graph)

money; anything that is bought or sold