Boundless Lecture Slides Available on the Boundless Teaching
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Boundless Teaching Platform Boundless empowers educators to engage their students with affordable, customizable textbooks and intuitive teaching tools. The free Boundless Teaching Platform gives educators the ability to customize textbooks in more than 20 subjects that align to hundreds of popular titles. Get started by using high quality Boundless books, or make switching to our platform easier by building from Boundless content pre-organized to match the assigned textbook. This platform gives educators the tools they need to assign readings and assessments, monitor student activity, and lead their classes with pre-made teaching resources. Using Boundless Presentations The Appendix The appendix is for you to use to add depth and breadth to your lectures. You can simply drag and drop slides from the appendix into the main presentation to make for a richer lecture experience. Get started now at: http: //boundless. com/teaching-platform Free to edit, share, and copy Feel free to edit, share, and make as many copies of the Boundless presentations as you like. We encourage you to take these presentations and make them your own. If you have any questions or problems please email: educators@boundless. com Free to share, print, make copies and changes. Get yours at www. boundless. com
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The Monetary System Introducing Money Introducing the Federal Reserve Creating Money The Monetary System Free to share, print, make copies and changes. Get yours at www. boundless. com
The Monetary System > Introducing Money • The Definition of Money • The Functions of Money • Measuring the Money Supply: M 1 • Measuring the Money Supply: M 2 • Other Measurements of the Money Supply Free to share, print, make copies and changes. Get yours at www. boundless. com/economics/textbooks/boundless-economics-textbook/the-monetary-system-27/introducing-money-114/
The Monetary System > Introducing the Federal Reserve • Introduction to Monetary Policy • The Creation of the Federal Reserve • Structure of the Federal Reserve • The Federal Open Market Committee and the Role of the Fed • The Federal Reserve and the Financial Crisis of 2008 • The Structure and Function of Other Banks Free to share, print, make copies and changes. Get yours at www. boundless. com/economics/textbooks/boundless-economics-textbook/the-monetary-system-27/introducing-the-federal-reserve-115/
The Monetary System > Creating Money • The Fractional Reserve System • Example Transactions Showing How a Bank Can Create Money • The Money Multiplier in Theory • The Money Multiplier in Reality Free to share, print, make copies and changes. Get yours at www. boundless. com/economics/textbooks/boundless-economics-textbook/the-monetary-system-27/creating-money-116/
Appendix Free to share, print, make copies and changes. Get yours at www. boundless. com
The Monetary System Key terms • barter An exchange goods or services without involving money. • central bank The principal monetary authority of a country or monetary union; it normally regulates the supply of money, issues currency and controls interest rates. • commercial bank A type of financial institution that provides services such as accepting deposits, making business loans, and offering basic investment products to the public. • currency Paper money. • deposit Money placed in an account. • deposit multiplier The maximum amount of commercial bank money that can be created by a given unit of reserves. • discount rate An interest rate that a central bank charges to depository institutions that borrow reserves from it. • Eurozone Those European Union member states whose official currency is the euro. • federal funds rate The interest rate at which depository institutions actively trade balances held at the Federal Reserve with each other. • Fiat money Money that is given value because those who use it believe it has value; the value is not derived from any inherent characteristic. • inflation An increase in the general level of prices or in the cost of living. Free to share, print, make copies and changes. Get yours at www. boundless. com
The Monetary System • liquidity The degree to which an asset can be easily converted into cash. • M 0 The amount of coin and banknotes in circulation. • M 1 The amount of cash in circulation plus the amount in bank checking accounts. • M 2 The amount of cash in circulation plus bank accounts, savings accounts and small deposits. • MB The portion of the commercial banks' reserves that is maintained in accounts with their central bank plus the total currency circulating in the public. • monetary policy The process by which the central bank, or monetary authority manages the supply of money, or trading in foreign exchange markets. • money multiplier The maximum amount of commercial bank money that can be created by a given unit of central bank money. • open market operations An activity by a central bank to buy or sell government bonds on the open market. A central bank uses them as the primary means of implementing monetary policy. • output gap The difference between an economy's actual GDP and its long-run potential GDP Free to share, print, make copies and changes. Get yours at www. boundless. com
The Monetary System • price stability A state of economy characterized by low inflation, and thus a stable value of money. • reserve Banks' holdings of deposits in accounts with their central bank. • reserve requirement The minimum amount of deposits each commercial bank must hold (rather than lend out). • reserves Banks' holdings of deposits in accounts with their central bank, plus currency that is physically held in the bank's vault. Free to share, print, make copies and changes. Get yours at www. boundless. com
The Monetary System Money Supply and Inflation The graph shows the relationship between the money supply and the inflation rate. By controlling the money supply, monetary authorities hope to influence the rate of inflation. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikipedia. "M 2 and. Inflation. " CC BY-SA http: //en. wikipedia. org/wiki/File: M 2 and. Inflation. png View on Boundless. com
The Monetary System Increasing the Money Supply The diagram shows how the central bank can increase the money supply by lending money through the discount window or purchasing bonds (open market operations). Free to share, print, make copies and changes. Get yours at www. boundless. com Wikipedia. "Money-creation. " CC BY http: //en. wikipedia. org/wiki/File: Money-creation. gif View on Boundless. com
The Monetary System FOMC Meeting The members of the FOMC meet eight times a year in order to vote on current monetary policies. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikipedia. "Federal Open Market Committee Meeting. " CC BY-SA http: //en. wikipedia. org/wiki/File: Federal_Open_Market_Committee_Meeting. jpg View on Boundless. com
The Monetary System Money Creation in a Fractional Reserve System The diagram shows the process through which commercial banks create money by issuing loans. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikipedia. "Money-creation. " CC BY-SA http: //en. wikipedia. org/wiki/File: Money-creation. gif View on Boundless. com
The Monetary System M 1 The M 1 measure includes currency in the hands of the public and checkable deposits in commercial banks. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikimedia. "USCurrency Federal Reserve. " Public domain https: //commons. wikimedia. org/wiki/File: USCurrency_Federal_Reserve. jpg View on Boundless. com
The Monetary System Money Creation and Reserve Requirements The graph shows the total amount of money that can be created with the addition of $100 in reserves, using different reserve requirements as examples. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikimedia. "Fractional-reserve banking with varying reserve requirements. " Public domain http: //commons. wikimedia. org/wiki/File: Fractionalreserve_banking_with_varying_reserve_requirements. gif View on Boundless. com
The Monetary System Money Creation and the Money Multiplier The graph shows theoretical amount of money that can be created with different reserve requirements. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikipedia. "Fractional reserve lending varyingrates 100 base. " Public domain http: //en. wikipedia. org/wiki/File: Fractional_reserve_lending_varyingrates_100 base. jpg View on Boundless. com
The Monetary System Federal Reserve Historically, the Federal Reserve has measured the money supply using the aggregates of M 1, M 2, and M 3. The M 2 aggregate includes M 1 plus nearmonies. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikimedia. "Federal Reserve. " CC BY-SA https: //commons. wikimedia. org/wiki/File: Federal_Reserve. jpg View on Boundless. com
The Monetary System Bank of England Charter The illustration shows the sealing of the Bank of England Charter in 1694. The structure and function of the Bank of England served as a model for the central banks formed later. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikipedia. "Bank of England Charter sealing 1694. " Public domain http: //en. wikipedia. org/wiki/File: Bank_of_England_Charter_sealing_1694. jpg View on Boundless. com
The Monetary System Euro Money Supply The measures of the money supply are all related, but the use of different measures may lead economists to different conclusions. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikipedia. "Euro money supply Sept 1998 - Oct 2007. " CC BY http: //en. wikipedia. org/wiki/File: Euro_money_supply_Sept_1998_-_Oct_2007. jpg View on Boundless. com
The Monetary System U. S. Monetary Base The monetary base is the sum of currency and reserves held in accounts at the central bank. After the financial crisis the monetary base increased dramatically: the result of banks starting to hold excess reserves as well as the central bank increasing the supply of reserves. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikimedia. "U. S. Monetary base. " CC BY-SA http: //commons. wikimedia. org/wiki/File: U. S. _Monetary_base. png View on Boundless. com
The Monetary System Government Bails Out AIG With $85 Billion Loan September 16, 2008: The Federal Reserve says the U. S. government has agreed to provide an $85 billion emergency loan to rescue the huge insurer AIG. The Fed says the U. S. Treasury Department is in full support of the decision. Free to share, print, make copies and changes. Get yours at www. boundless. com View on Boundless. com
The Monetary System Commodity Money Conch shells have been used as commodity money in the past. The value of commodity money is derived from the commodity out of which it is made. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikimedia. "Conch shells. " CC BY-SA https: //commons. wikimedia. org/wiki/File: Conch_shells. jpg View on Boundless. com
The Monetary System Structure of the Federal Reserve The diagram shows the relationship between the different organizations that compose the Federal Reserve System Free to share, print, make copies and changes. Get yours at www. boundless. com Wikipedia. "Federal. Reserve System. " GNU FDL http: //en. wikipedia. org/wiki/File: Federal. Reserve_System. png View on Boundless. com
The Monetary System Barter In a barter system, individuals possessing something of value could exchange it for something else of similar or greater value. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikimedia. "Olaus Magnus - On Trade Without Using Money. " Public domain https: //commons. wikimedia. org/wiki/File: Olaus_Magnus__On_Trade_Without_Using_Money. jpg View on Boundless. com
The Monetary System Attribution • Boundless Learning. "Boundless. " CC BY-SA 3. 0 http: //www. boundless. com//economics/definition/fiat-money • Wikispaces. CC BY-SA http: //economicsforyou. wikispaces. com/file/detail/8+(+Money+&+Banking). docx • Wikipedia. "Money. " CC BY-SA 3. 0 https: //en. wikipedia. org/wiki/Money • Wikipedia. "Money. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Money • Wiktionary. "barter. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/barter • Wikispaces. "money-credit - home. " CC BY-SA http: //money-credit. wikispaces. com/ • Wikibooks. "Introduction to Economics. " CC BY-SA 3. 0 https: //en. wikibooks. org/wiki/Introduction_to_Economics%23 Money • Wikipedia. "Barter. " CC BY-SA 3. 0 https: //en. wikipedia. org/wiki/Barter • Wikibooks. "Principles of Economics/Money Supply. " CC BY-SA 3. 0 https: //en. wikibooks. org/wiki/Principles_of_Economics/Money_Supply%23 Money • Wikipedia. "Barter. " CC BY-SA 3. 0 https: //en. wikipedia. org/wiki/Barter • Wikipedia. "History of money. " CC BY-SA 3. 0 https: //en. wikipedia. org/wiki/History_of_money • Wiktionary. "M 1. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/M 1 • Wikispaces. "Trading. Diary - Money. " CC BY-SA http: //tradingdiary. wikispaces. com/Money • Wikispaces. "Moeller - Unit Four. " CC BY-SA http: //moeller. wikispaces. com/Unit+Four • Wikibooks. "Principles of Finance/Section 1/Chapter/Financial Markets and Institutions/Federal Reserve. " CC BY-SA 3. 0 http: //en. wikibooks. org/wiki/Principles_of_Finance/Section_1/Chapter/Financial_Markets_and_Institutions/Federal_Reserve%2 3 Monetary_policy • Wikipedia. "Money supply. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Money_supply Free to share, print, make copies and changes. Get yours at www. boundless. com
The Monetary System • Wiktionary. "M 2. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/M 2 • Wikipedia. "Money supply. " CC BY-SA 3. 0 https: //en. wikipedia. org/wiki/Money_supply • Wikispaces. "Moeller - Unit Four. " CC BY-SA http: //moeller. wikispaces. com/Unit+Four • Wikipedia. "M 2 (economics). " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/M 2_(economics)%23 Empirical_measures • Wikipedia. "MB. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/MB • Wiktionary. "M 0. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/M 0 • Wikipedia. "Fractional reserve banking. " CC BY-SA 3. 0 https: //en. wikipedia. org/wiki/Fractional_reserve_banking • Wikipedia. "Money supply. " CC BY-SA 3. 0 https: //en. wikipedia. org/wiki/Money_supply • Wiktionary. "inflation. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/inflation • Wikipedia. "output gap. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/output%20 gap • Wikipedia. "Monetary policy. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Monetary_policy • Wiktionary. "central bank. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/central_bank • Wikipedia. "reserve requirement. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/reserve%20 requirement • Wikipedia. "Discount Rate. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Discount_window • Wikipedia. "Federal Funds. " GNU FDL http: //en. wikipedia. org/wiki/Federal_funds • Wikipedia. "Central banks. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Central_bank Free to share, print, make copies and changes. Get yours at www. boundless. com
The Monetary System • Wikipedia. "History of central banking in the united states. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/History_of_central_banking_in_the_United_States • Wikipedia. "Federal Reserve System. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Federal_reserve • Wiktionary. "monetary policy. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/monetary_policy • Wikipedia. "open market operations. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/open%20 market%20 operations • Wikipedia. "Federal Reserve Board of Governors. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Board_of_Governors_of_the_Federal_Reserve_System • Wikipedia. "Janet Yellen. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Janet_Yellen • Wikipedia. "Federal Reserve System. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Federal_Reserve_System • Wikipedia. "Central Bank. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Central_bank%23 Independence • Wikipedia. "Structure of the Federal Reserve System. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Structure_of_the_Federal_Reserve_System • Wikipedia. "reserve. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/reserve • Boundless Learning. "Boundless. " CC BY-SA 3. 0 http: //www. boundless. com//economics/definition/federal-funds-rate • Wikipedia. "Open market operations. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Open_market_operations • Wiktionary. "discount rate. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/discount_rate • Wiktionary. "liquidity. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/liquidity • Wikipedia. "open market operations. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/open%20 market%20 operations • Wikipedia. "Financial crisis of 2007 -2010. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Financial_crisis_of_2007 -2010 • Wiktionary. "price stability. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/price_stability • Wiktionary. "monetary policy. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/monetary_policy • Wiktionary. "Eurozone. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/Eurozone Free to share, print, make copies and changes. Get yours at www. boundless. com
The Monetary System • Wikipedia. "People's Bank of China. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/People's_Bank_of_China • Wikipedia. "Bank of england. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Bank_of_england • Wikipedia. "European Central Bank. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/European_Central_Bank • Wikipedia. "Central bank. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Central_bank • Wiktionary. "deposit. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/deposit • Wikipedia. "reserves. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/reserves • Wikipedia. "Fractional reserve banking. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Fractional_reserve_banking • Wiktionary. "currency. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/currency • Wikipedia. "deposit multiplier. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/deposit%20 multiplier • Wikipedia. "Money Multiplier. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Money_multiplier • Wikipedia. "Money Creation. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Money_creation • Wiktionary. "central bank. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/central_bank • Wikipedia. "money multiplier. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/money%20 multiplier • Wikipedia. "commercial bank. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/commercial%20 bank • Wikipedia. "Money multiplier. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Money_multiplier • Wikipedia. "reserve requirement. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/reserve%20 requirement • Wikipedia. "money multiplier. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/money%20 multiplier • Wikipedia. "Money multiplier. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Money_multiplier Free to share, print, make copies and changes. Get yours at www. boundless. com
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