Agree on Rules to D. Japan Re G Daon I afA-- BES12-B50 Macroeconomics Final Exam
ID: 1126763 • Letter: A
Question
Agree on Rules to D. Japan Re G Daon I afA-- BES12-B50 Macroeconomics Final Exam Review Sheet -Be able to define and explain the functions of money. 2- Know the difference between "money and "near money -Know what comprises the money (stock) supply and their definitions. 4 - Know when the Federal Reserve System (FED) was created 5-Know the framework of the L - Know what currently backs the money supply 7 - Know the functions of the Federal Reserve banks. 7 - Be able to define quasi-public bank and bankers' banks. ·Know the main responsibility of the board of governors. 1. Know the main responsibility of the FOMC. 13 -Know about bank balance sheets: definition, terms (required reserve, reserve ratio, total or actual to the reserve, and excess reserve) and how to make changes on the balance sheet, or in a word probiem. Know how commercial banks use loans to increase or decrease the money supply -know about how much money a single bank can loan out and the effect on the banking system Know the effect of changes in the reserve ratio on excess reserves. eth -Know about the transactions demand and the asset demand for money -Know who sets the supply of money -Know the monetary policy tools and know how they would be applied during a recession or duringExplanation / Answer
1. Money has four functions, which are as follows:
1) A medium of exchange: People can exchange goods or services by exchanging money. For example, I can buy my groceries using the money. So, here money acts as a medium of exchange.
2) Unit of Account or Measure of Value: Money is used as units to express the value of goods and services. For example, when we say that a burger cost $5, we are using money as a unit of account or a measure of value in which one dollar expresses a certain amount of value.
3) Standard of deferred payment: Deferred payment is the payment which is done on a future date. Loan repayment is an example of deferred payment. Money helps in borrowing and lending by acting as a standard of deferred payment.
4) Store of Value: Money can be used as a store of value. Money can be saved, retrieved and exchanged for goods and services in the future. So, money acts as a store of value.