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MONEY SUPPLY

MONEY SUPPLY. Reference 10.2. Money Supply is the total of money in circulation. Currency – bills and coins federal reserve notes Checking Accounts demand deposits 3. Traveler’s Checks. M1. $2,149,200,000,000 October 2011. M2. M1 + “near-money” Passbook savings account

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MONEY SUPPLY

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  1. MONEY SUPPLY Reference 10.2

  2. Money Supply is the total of money in circulation • Currency – bills and coins federal reserve notes • Checking Accounts demand deposits 3. Traveler’s Checks

  3. M1 $2,149,200,000,000 October 2011

  4. M2 • M1 + “near-money” • Passbook savings account • Short term time deposit accounts • 24 hr money market funds Near-money cannot be used as a medium of exchange, but it can be quickly converted to cash. $9,606,500,000,000

  5. Are credit cards money? • No, because you must pay the credit card company back for the use of their money. • You can use a credit card as medium of exchange • But you can’t use it as a repayment of debt. You use it to incur debt. Definition of money: any good widely accepted for exchange and in the repayment of debt. Money is a store of value.

  6. 10.2 Money Supply p.277-282 • Read and complete Section Review #1-4

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