EC202 1nd Edition Lecture 17Outline of Last Lecture I. Bond marketsII. Stock marketsIII. Short term securities marketsIV. Loans marketsOutline of Current Lecture II. Money Current Lecture-money: any asset that can be used directly in making purchases-currency and coin-checking account balance-principal uses of money-medium of exchange-unit of account-store of value-medium of exchange: an asset used in purchasing goods and services-reduces transaction costs-the alternative is barter-barter: the direct trade of goods or services for other goods or services-has very high transaction costs-requires double coincidence of wants-permits specialization in productionThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.-dramatically increases efficiency and living standards-other uses of money-unit of account-a basic measure of economic value-a yardstick for measuring value-prices expressed in dollars in the U.S.-store of value-an asset that serves as a means of holding wealth-not a particularly good way to hold wealth since most forms of money pay no interest-measuring money-M1: sum of currency outstanding and balances held in checking accounts and travelers checks-M2: all the assets in M1 plus some additional assets that are usable in making paymentsbut at greater cost or inconvenience than currency or checks-savings accounts, small time deposits, money market mutual funds + M1-the money supply: consists of…-currency in the hands of the public-deposit balances held by commercial
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