曼昆宏观经济学第29章节.ppt

29 The Monetary System Questions What is money？ What’re the functions of money? Where does money come from? Who creates money? How is money created? Is any problem in the course of money creation? Content The meaning of the money -the definition of money -the functions of money The federal reserve system -Fed and the money supply -banks and the money supply Problems in controlling the money supply THE MEANING OF MONEY Money is the set of assets in an economy that people regularly use to buy goods and services from other people. Money has three functions in the economy: Medium of exchange Unit of account Store of value The Functions of Money Medium of Exchange A medium of exchange is an item that buyers give to sellers when they want to purchase goods and services. A medium of exchange is anything that is readily acceptable as payment. Unit of Account A unit of account is the yardstick people use to post prices and record debts. Store of Value A store of value is an item that people can use to transfer purchasing power from the present to the future. Liquidity Liquidity is the ease with which an asset can be converted into the economy’s medium of exchange. Discussion Which of the following are money in the U.S economy? Which are not? Explain your answers by discussing each of the three functions of money. A U.S. penny A Mexican peso A Picasso painting A plastic credit card The Kinds of Money Commodity money takes the form of a commodity with intrinsic value. Examples: Gold, silver, cigarettes. Fiat money is used as money because of government decree. It does not have intrinsic value. Examples: Coins, currency, check deposits. Money in the U.S. Economy Currency is the paper bills and coins in the hands of the public. Demand deposits are balances in bank accounts that depositors can access on demand by writing a check. Figure 1 Money in the U.S. Economy CASE STUDY: Where Is All The Currency? In 2001 there was about $580 billion of U.S. currency