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January 19, 2018 

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PERFECT COMPETITION, REALISM: Perfect competition is an idealized market structure that does NOT exist in the real world. While some real world industries might come relatively close to one or two of the four key characteristics of perfect competition, none matches all four sufficiently that they can be declared PERFECTLY competitively. Some industries come close on the large number of small firms and the identical product characteristics. A few industries have relatively good, although not perfect, information about prices and technology. However, almost all industries fall far short of the perfect mobility characteristics.

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Lesson Contents
Unit 1: What It Is
  • Banking
  • Intermediary
  • Unit 1 Summary
  • Unit 2: Banking Details
  • Types
  • Commercial Banks
  • S&Ls
  • Credit Unions
  • Savings Banks
  • Balance Sheet
  • Unit 2 Summary
  • Unit 3: Reserve Banking
  • Reserves
  • Legal, Required, and Excess Reserves
  • Goldsmith
  • Goldsmith Deposits
  • Goldsmith Loans
  • Goldsmith Reserves
  • Unit 3 Summary
  • Unit 4: Regulating Banks
  • Why?
  • Who?
  • How?
  • Unit 4 Summary
  • Unit 5: The Economy
  • Benefits
  • Problems
  • Unit 5 Summary
  • Course Home
    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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    UNEMPLOYED PERSONS

    People who are NOT actively engaged in the production of goods and services, but ARE actively seeking employment in the production of goods and services. This is one of three official categories used to classify individuals by the Bureau of Labor Statistics (BLS) based on information obtained from the Current Population Survey. The other two categories are employed persons and not in the labor force. The sum of employed persons and unemployed persons constitute the civilian labor force.

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    APLS

    PINK FADFLY
    [What's This?]

    Today, you are likely to spend a great deal of time at the confiscated property police auction seeking to buy either clothing for your pet iguana or a set of hubcaps. Be on the lookout for telephone calls from long-lost relatives.
    Your Complete Scope

    This isn't me! What am I?

    The first U.S. fire insurance company was established by Benjamin Franklin in 1752 in Philadelphia.
    "You are never given a dream without also being given the power to make it true."

    -- Richard Bach, Author

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