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Barter
Commodity
money
Money accepted
by law
Federal
FederalReserve
ReserveBank
Bank
ofofRichmond
Richmond
Number refers to
5th district; also
corresponds to
the letter E
the pyramid a
symbol of material
strength and
endurance
the
American
bald eagle
the
theformer
former13
13
colonies
colonies
The
TheExecutive
ExecutiveBranch
Branch
The
TheLegislative
LegislativeBranch
Branch
The
TheJudiciary
Judiciary
Branch
Branch
PEACE and WAR
7
Medium of exchange
Store of value
Unit of account
Liquidity
property of
M1 : transactions money
M2 : broad money
or near monies
M3 : large-denomination money
Transactions money
M1 =
+
+
+
currency in circulation
demand deposits
travelers checks
other checkable
deposits
10
Near Monies
M2 =
+
+
+
+
M1
savings accounts
time deposits (< $100,000)
money market accounts
repurchase agreements
(<$100,000)
11
M3 =
+
+
+
M2
time deposits
(>$100,000)
repurchase agreements
(>$100,100)
Eurodollars
12
Commercial banks
Savings and loan associations
Life insurance companies
Pension funds
13
14
T-account of Citibank:
______Assets________________Liabilities____________
Reserves
Loans
$200
800
Demand deposits
$1,000
15
16
Vivian borrows $640 from Fleet Bank and buys a new TV set at
Sears department store.
Sears deposits Vivians check at Bank of New York.
17
+ other banks
Demand Deposits
$1,000
800
640
+ additional deposits
___________
= $ 5,000 Total
18
= 5 x $1,000
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