Monday 824
Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 10 Money and Prices in the Long Run Chapter 29 of 36 The Monetary System Section 6 of 22 … Figure 1 – Two measures of the money stock for the U.S. economy The two most widely followed measures of the money stock are M1 and M2. Data for year 2007. ... How do we measure the amount of money, the money stock, in the U.S. economy? The most obvious money is currency, the paper bills and coins circulated by the public. Currency is not the only asset you can use to buy goods and services. Stores commonly also accept personal checks. So, to measure the money stock you would include checking accounts. After including checking accounts as part of the money stock we are led to consider the large variety of other accounts people hold at banks and other financial institutions. … Bank depositors usually cannot write checks on their savings account balances. But they can easily transfer funds from savings to checking a...