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GOODS: When used without an adjective modifier (like "final" goods or "intermediate" goods), this generically means physical, tangible products used to satisfy people's wants and needs. This term good should be contrasted with the term services, which captures the intangible satisfaction of wants and needs. As such, you will frequently see the plural combination of these two phrases together "goods and services" to indicate the wide assortment of economic goods produced using the economy's scarce resources. As you might imagine this general notion of wants and needs satisfying goods and services pops up throughout the study of economics.
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Lesson Contents
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Unit 1: What It Is |
Unit 2: Banking Details |
Unit 3: Reserve Banking |
Unit 4: Regulating Banks |
Unit 5: The Economy |
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Banking
In this lesson, we take a look at the role banking plays in the macroeconomy. Banking is most important to the study of macroeconomics because a substantial fraction of the economy's money supply is under the direct control of commercial banks (as opposed to government). Because government needs to control the money supply to promote business-cycle stability, they need to control banks control of the money supply. As such, we need to take a look at how banks operate, including how they issue the deposits that make up the money supply. - The first unit opens this lesson with an overview of banks and the banking system, including their role as financial intermediaries.
- Moving into the second unit, we take a closer look at the banking system, especially the four basic types of banks (banks, savings and loans, credit unions, and mutual savings banks) and the assorted assets and liabilities of a typical bank.
- The key banking principle -- fractional-reserve banking -- is then discussed in the third unit with a little story about Fred the Goldsmith.
- The fourth unit of this lesson discusses the why, how, and who of bank regulation.
- The fifth and final unit then examines the benefits and problems of fractional-reserve banking for the macroeconomy.
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ASYMMETRIC INFORMATION Information is not equally available to everyone. Asymmetric information results because efficient information search inevitably stops short of compete information. Some people obtain more benefits from information than others, are willing to incur higher search costs, and thus end up knowing more. Or they incur lower information search costs and have easier access to the information. In a market, sellers tend to have more information about the good than buyers. Asymmetric information gives rise to adverse selection, moral hazard, and the principal-agent problem. These problems can be lessened through signalling and screening.
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PURPLE SMARPHIN [What's This?]
Today, you are likely to spend a great deal of time visiting every yard sale in a 30-mile radius trying to buy either a replacement battery for your pocket calculator or a how-to book on home remodeling. Be on the lookout for crowded shopping malls. Your Complete Scope
This isn't me! What am I?
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Three-forths of the gold mined each year is used to manufacture jewelry.
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"Lord, where we are wrong, make us willing to change; where we are right, make us easy to live with. " -- Peter Marshall, US Senate chaplain
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SMSA Standard Metropolitan Statistical Area
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