TAILIEUCHUNG - Chapter: Money and modern banking

The budget deficit equivalent to total government spending tax minus total government spending income tax independently, but depend on the net income, • Why does society need money? • Why do governments wish to influence money supply? • How do financial markets interact with the ‘real’ economy? • What is the relationship between money and interest rates? | Chapter 23 Money and modern banking David Begg, Stanley Fischer and Rudiger Dornbusch, Economics, 6th Edition, McGraw-Hill, 2000 Power Point presentation by Peter Smith Some key questions Why does society need money? Why do governments wish to influence money supply? How do financial markets interact with the “real” economy? What is the relationship between money and interest rates? 23. See the introduction to Chapter 23 in the main text. Money Any generally accepted means of payment for delivery of goods or the settlement of debt Legal money notes and coins Customary money IOU money based on private debt of the individual . bank deposit. 23. See the introduction to Chapter 23 in the main text, also Section 23-1. Money and its functions Medium of exchange money provides a medium for the exchange of goods and services which is more efficient than barter Unit of account a unit in which prices are quoted and accounts are kept Store of value money can be used to make purchases

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