Professional Documents
Culture Documents
AND BANKING
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Assessment
Time
Assessment Rate Form of Assessment
allowance
Class participation 10% Oral/ in writing 5’
Surplus Deficit
units Markets units
Financial Intermediaries
Example: r = 8%
- Loan approved for Project I: 10% return with
100% probability of success
- New opportunity arises (Project II): 100%
return with 50% probability of success
BREAD
MONEY
Shoe
Seller Milk Clothing
Seller Seller
Q: How many prices do we need for a market with 100 different goods?
How about 1000 different goods?
Commodity Money
Fiat Money
Checks
Electronic Payment
E-Money
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MONEY AND BANKING
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MONEY AND BANKING
Monetary and Fiscal Policy
•Monetary policy is the management of the money supply
and interest rates
◦ Conducted in the U.S. by the Federal Reserve Bank (Fed)
•Fiscal policy is government spending and taxation
◦ Budget deficit is the excess of expenditures over revenues for a
particular year
◦ Budget surplus is the excess of revenues over expenditures for
a particular year
◦ Any deficit must be financed by borrowing
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MONEY AND BANKING
MONEY AND BANKING 64