by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are the Functions of Money? Money solves the problems that the barter system creates. The functions of money include: Medium of Exchange Store of Value Unit of Account Standard of Deferred Payment What is a Medium of Exchange? First, money serves as a medium of...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Bank Regulation?A safe and stable national financial system is a critical concern of the Federal Reserve. The goal is not only to protect individuals’ savings, but to protect the integrity of the financial system itself. This esoteric task is usually behind...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are Excess Reserves?Banks are legally required to hold a minimum level of reserves, but no rule prohibits them from holding additional excess reserves above the legally mandated limit. For example, during a recession banks may be hesitant to lend, because they...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is a Merged Currency? An approach to exchange rate policy is for a nation to choose a common currency shared with one or more nations is also called a merged currency. A merged currency approach eliminates foreign exchange risk altogether. Just as no one worries...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is an Exchange Rate Policy? Exchange rate policies come in a range of different forms. Let the foreign exchange market determine the exchange rate; let the market set the value of the exchange rate most of the time, but have the central bank sometimes intervene...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is a Bank Balance Sheet? A balance sheet is an accounting tool that lists assets and liabilities. An asset is something of value that you own and you can use to produce something. For example, you can use the cash you own to pay your tuition. If you own a home,...
