Economics 201 Data Exercise

A measure of the money supply which combines any liquid or cash assets held within a central bank and the amount of physical currency circulating in the economy. The money supply is divided into two distinct categories: M1—assets that can be easily accessed and immediately used to purchase goods and service. These are referred to as liquid assets. Money deposited in checking accounts meets this criteria because checks represent demand deposits, as they are paid “on demand” for the cash in the account. This is money which is available immediately for spending and therefore fulfills the medium of exchange function of money. M2—all of M1 and assets that cannot be used directly as cash but can be easily be converted to cash. This monetary aggregate

This study should draw the attention of individuals working or pursuing a degree in business. Being realistic, the world economy revolves around the money supply and anyone who wants to know anything that has to do with the money they are working hard for should find such a study

The beginning of the film describes the complex system that the US government uses to create money, working with the Federal Reserve to print more and more money without valuation to it, and as they print more currency, each dollar becomes devalued (Joseph, 2008). Joseph states that with the current system, there is no way to have money without having debt, and without money we wouldn’t have debt, essentially a paradox not having one without the other. The dilemma with this is that although someone may have $100 in their pocket, that money isn’t worth anything because the Federal Reserve and the US Government are constantly printing more and more money, devaluing each dollar bill more by the second.

At the end of an economic depression, the year 1898 proved to show that better times were coming. The money supply of the country was showing an increase once again. During 1898, the money supply of the United States has been increased by at least $500,000,000 (“Abundant Money” 1). Gold production and gold importation have added at least $200,000,000 to the stock. The net balance in the foreign trade account accounted for another $300,000,000 (“Abundant Money” 1). This increase in the money supply makes money cheap and easy. Its abundance was verified by the large holdings of the New York banks and of the National Treasury. Investment activity was very active and the purchase of bonds resulted in a steady rise in the prices of all first-class

As a store of value, money allowed for the “accumulation of wealth by holding dollars or other assets that [could] be used to buy goods and services” (Hubbard, 2012, p. 29). It allowed a person to ‘store’ his or her wealth, without worrying that it would spoil, like the apples and vegetables would have. Though, if they weren’t careful it could lose value due to inflation.

The main functions of money are distinguished among the terms of: a medium of exchange, a unit of store value and standard of deferred payments.

Put simply the demand for money depends on how much money individuals are going to want to hold. To determine how much money individuals are going to want to hold there are a plethora of determinants that must be analyzed. Demand for money is broken down into two forms of demand, transaction demand for money and portfolio demand for money (Cecchetti). These two forms of demand are based on money as it is used to pay for goods and money as it is used as a store of value. The econmony and the demand for money are always changing. In today’s society more changes are approaching now that Janet Yellen has become Chair of the Federal Reserve.

In Friedman’s monetarist construct of money has two side that is highly active. One of the side is money is being the cause of all failures and asymmetries in the economy (in the short term). The other side is neutral which money is influencing only the price level (in the long term). The nominal quantity of money is determined by its supply. On the other hand, the real volume of the money stock is expressed in the amount of goods and services that can be acquired for a given nominal amount of money and is conditioned by the demand for money, which is directly related to the price level.

Ferguson’s book has many strengths and a few weaknesses. One of the strengths of the book is the organization and presentation of key concepts in chronological order, which lets the reader easily follow the evolution of money. The book consists of an introduction, six chapters, and an afterword. In the first chapter, Ferguson describes the beginning of money, banking, and credit. In the second chapter, Ferguson explains the beginning of the bond market, and in the third chapter, the stock market. In the fourth chapter, Ferguson presents the story of insurance, and, in the fifth chapter, the real estate market. In the final chapter, Ferguson discusses international finance.

There are several procedures to estimate the anticipated money supply; the present study has applied ARIMA structures of narrow and broad money supply for the estimation of anticipated money supply. After identifying anticipated money supply, a regression equation has been performed taking price level as dependent variable and anticipated money supply as explanatory variable.

Wienclaw (2015) states that regression analysis allows for the use of variables in mathematical models to determine the value of an unknown variable. This can require several assumptions, including that the information being used is correct. However, as Wienclaw (2015) points out, in reality, data is not always perfect or correct. In the business world this requires great care when analyzing models and using regression analysis (Wienclaw, 2015). Models and regression analysis are best used to assist organizations in developing strategy based on market information. Wienclaw (2015) describes the relationship between variables as “complex and synergistic”. When using this information for managerial decision making, leaders must consider the use of certain variables over others, and the impacts of leaving out variables on the overall decision (Wienclaw, 2015). Wienclaw (2015) also points out that severe deviations in analysis could demonstrate those variables are vital to the analysis.

Money is considered an important determinant of the condition of the economy of a country. In the eye of the federal government, there is a broader measure of what money is in the U.S and in other parts of the world imply.

At this point the explicit demand for money balances can be derived. Additionally, this is illustrated by the set of diagrams in Figure {1}. In which interest rate, i_1, equilibrium is at point E1. Whilst at the lower interest rate, i_2, equilibrium is E2, where the demand for money rises from M1 to M2. The speculative demand for money can be derived, a downward sloping curve, showing an inverse relationship between money balances and the various rates of interest illustrated below:

This essay will evaluate the reforms to the banking system of ability of banks to create money in the form of bank deposits when they make loans and the problems caused by the way in which money is created by banks and the effect on debt, house prices, inequality, the environment, the level of democracy, recessions & crises, jobs & businesses and taxes & public spending.

Money market refers to the market where money and highly liquid marketable securities are bought and sold having a maturity period of one or less than one year. It is not a place like the stock market but an activity conducted by telephone.