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MEASURE OF VALUE: The money function in which money is used as the common benchmark to designate the prices of goods throughout the economy. Measure of value, or unit of account, means money is functioning as the measuring unit for prices. In other words, prices of goods are stated in terms of the monetary unit. This is one of four basic functions of money. The other three are medium of exchange, store of value, and standard of deferred payment.
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Lesson 19: Money Creation | Unit 4: The Multiplier
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Page: 18 of 23
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Topic:
The Money Multiplier
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Checkable deposits are only part of the money supply.- Looking only at checkable deposits, a $100 deposit gives us $1,000 with a deposit multiplier of 10.
However:- Money, in total, doesn’t expand by $1,000.
- First: Banks might keep a few excess reserves, which limits deposit and money creation.
- Second: Loans might leak out of checkable deposits and into savings deposits, which limits money creation.
- Third: Loans might leak out of checkable deposits and into cash, which limits reserves and money creation.
Note:- The Federal Reserve uses a complex money multiplier to control the amount of money circulating in the economy.
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AGGREGATE DEMAND DECREASE, LONG-RUN AGGREGATE MARKET A shock to the long-run aggregate market caused by a decrease in aggregate demand resulting in and illustrated by a leftward shift of the aggregate demand curve. A decrease in aggregate demand in the long-run aggregate market results in an increase in the price level but no change in real production. The level of real production resulting from the aggregate demand shock is full-employment real production.
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time touring the new suburban shopping complex looking to buy either a genuine down-filled pillow or one of those "hang in there" kitty cat posters. Be on the lookout for defective microphones.
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Post WWI induced hyperinflation in German in the early 1900s raised prices by 726 million times from 1918 to 1923.
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"Experience keeps a dear school, but fools will learn in no other. " -- Benjamin Franklin
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ASX
Australian Stock Exchange
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