10 money and prices in the long run 長期的貨幣與物價. copyright © 2004 south-western 29 the...

10 MONEY AND PRICES IN THE LONG RUN長期的貨幣與物價

Copyright © 2004 South-Western

2929The Monetary System

貨幣體系


THE MEANING OF MONEY

• Money is the set of assets in an economy that people regularly use to buy goods and services from other people.

•貨幣：經濟體系中，人們通常用來購買商品與服務的資產。


The Functions of Money

• Money has three functions in the economy:• Medium of exchange• Unit of account• Store of value

• 貨幣的功能• 交易媒介• 計價單位• 價值儲存



• Medium of Exchange (交易媒介 )• A medium of exchange is an item that buyers give

to sellers when they want to purchase goods and services.

• A medium of exchange is anything that is readily acceptable as payment.



• Unit of Account (計價單位 )• A unit of account is the yardstick people use to post

prices and record debts.

• Store of Value (價值儲存 )• A store of value is an item that people can use to

transfer purchasing power from the present to the future.



• Liquidity• Liquidity is the ease with which an asset can be

converted into the economy’s medium of exchange.• 流動性：一項資產被轉換成交易媒介的難易程

度。


The Kinds of Money 貨幣的種類

• Commodity money takes the form of a commodity with intrinsic value.• Examples: Gold, silver, cigarettes.

• 商品貨幣：貨幣本身即具備某種固有財貨的價值。

• 例如：黃金、白銀、香菸


The Kinds of Money 貨幣的種類

• Fiat money is used as money because of government decree.• It does not have intrinsic value.• Examples: Coins, currency, check deposits.

• 強制貨幣：不具備固有價值的貨幣，要靠政府法令規定才能具備貨幣的功能。

• 例如：鑄幣、紙幣、支票存款。• THIS NOTE IS LEGAL TENDER FOR ALL

DEBTS, PUBLIC AND PRIVATE


Money in the U.S. Economy

• Currency is the paper bills and coins in the hands of the public.

• 通貨：社會大眾手中的紙鈔與鑄幣。• Demand deposits are balances in bank accounts

that depositors can access on demand by writing a check.

• 活期存款：存款人可隨時開支票提款的存款種類。

Figure 1 Money in the U.S. Economy

Copyright©2003 Southwestern/Thomson Learning

Billionsof Dollars

• Currency($580 billion)

• Demand deposits• Traveler’s checks• Other checkable deposits ($599 billion)

• Everything in M1($1,179 billion)

• Savings deposits• Small time deposits• Money market mutual funds• A few minor categories ($4,276 billion)

0

M1$1,179

M2$5,455


貨幣存量

• M1A= 通貨淨額 + 企業及個人 ( 含非營利團體 ) 在貨幣機構之支票存款及活期存款

• M1B=M1A+ 個人 ( 含非營利團體 ) 在貨幣機構之活期儲蓄存款或

• M1B= 通貨淨額 + 存款貨幣

• M2=M1B+ 準貨幣


信用卡、簽帳卡與貨幣


CASE STUDY: Where Is All The Currency?

• In 2001 there was about $580 billion of U.S. currency outstanding.• That is $2,734 in currency per adult.

• Who is holding all this currency?• Currency held abroad• Currency held by illegal entities

• Q 美國打算增加美元通貨，買進債券，引起美元貶值，為什麼？ (20090322)


THE FEDERAL RESERVE SYSTEM

• The Federal Reserve (Fed) serves as the nation’s central bank.• It is designed to oversee the banking system.• It regulates the quantity of money in the economy.

• Fed 作為中央銀行的功能• 1. 監督、管理銀行 ( 我國部份管理銀行的功

能轉交給金融機構監督管理委員會 )

• 2. 控制經濟體系中可以使用的貨幣數量。


作業

• 上網查詢美國的中央銀行 Fed 的組織、功能、理事主席等

• 書面報告 A4 單面一張以下• 口頭報告三分鐘以內



• The Fed was created in 1914 after a series of bank failures convinced Congress that the United States needed a central bank to ensure the health of the nation’s banking system.



• The Structure of the Federal Reserve System:• The primary elements in the Federal Reserve

System are:• 1) The Board of Governors

• 2) The Regional Federal Reserve Banks

• 3) The Federal Open Market Committee


The Fed’s Organization

• The Fed is run by a Board of Governors, which has seven members appointed by the president and confirmed by the Senate.

• Among the seven members, the most important is the chairman. • The chairman directs the Fed staff, presides over

board meetings, and testifies about Fed policy in front of Congressional Committees.



• The Board of Governors• Seven members • Appointed by the president • Confirmed by the Senate• Serve staggered 14-year terms so that one comes

vacant every two years.• President appoints a member as chairman to serve a

four-year term.



• The Federal Reserve System is made up of the Federal Reserve Board in Washington, D.C., and twelve regional Federal Reserve Banks.



• The Federal Reserve Banks• Twelve district banks• Nine directors

• Three appointed by the Board of Governors.

• Six are elected by the commercial banks in the district.

• The directors appoint the district president, which is approved by the Board of Governors.

The Federal Reserve System

Copyright©2003 Southwestern/Thomson Learning



• The Federal Reserve Banks• The New York Fed implements some of the Fed’s

most important policy decisions.



• The Federal Open Market Committee (FOMC)• Serves as the main policy-making organ of the

Federal Reserve System.• Meets approximately every six weeks to review the

economy.



• The Federal Open Market Committee (FOMC) is made up of the following voting members:• The chairman and the other six members of the

Board of Governors.• The president of the Federal Reserve Bank of New

York.• The presidents of the other regional Federal Reserve

banks (four vote on a yearly rotating basis).



• Monetary policy is conducted by the Federal Open Market Committee.• Monetary policy is the setting of the money supply

by policymakers in the central bank• The money supply refers to the quantity of money

available in the economy.


The Federal Open Market Committee

• Three Primary Functions of the Fed• Regulates banks to ensure they follow federal laws

intended to promote safe and sound banking practices.

• Acts as a banker’s bank, making loans to banks and as a lender of last resort.

• Conducts monetary policy by controlling the money supply.



• Open-Market Operations• The money supply is the quantity of money

available in the economy.• The primary way in which the Fed changes the

money supply is through open-market operations.• The Fed purchases and sells U.S. government bonds.



• Open-Market Operations• To increase the money supply, the Fed buys

government bonds from the public.• To decrease the money supply, the Fed sells

government bonds to the public.


BANKS AND THE MONEY SUPPLY

• Banks can influence the quantity of demand deposits in the economy and the money supply.



• Reserves are deposits that banks have received but have not loaned out.

• In a fractional-reserve banking system, banks hold a fraction of the money deposited as reserves and lend out the rest.



• Reserve Ratio• The reserve ratio is the fraction of deposits that

banks hold as reserves.


Money Creation with Fractional-Reserve Banking

• When a bank makes a loan from its reserves, the money supply increases.

• The money supply is affected by the amount deposited in banks and the amount that banks loan.

• Deposits into a bank are recorded as both assets and liabilities.

• The fraction of total deposits that a bank has to keep as reserves is called the reserve ratio.

• Loans become an asset to the bank.



• This T-Account shows a bank that…• accepts deposits,• keeps a portion

as reserves, • and lends out

the rest. • It assumes a

reserve ratio of 10%.

Assets Liabilities

First National Bank

Reserves$10.00

Loans$90.00

Deposits$100.00

Total Assets$100.00

Total Liabilities$100.00



• When one bank loans money, that money is generally deposited into another bank.

• This creates more deposits and more reserves to be lent out.

• When a bank makes a loan from its reserves, the money supply increases.


The Money Multiplier

• How much money is eventually created in this economy?



• The money multiplier is the amount of money the banking system generates with each dollar of reserves.



Assets Liabilities

First National Bank

Reserves$10.00

Loans$90.00

Deposits$100.00

Total Assets$100.00


Assets Liabilities

Second National Bank

Reserves$9.00

Loans$81.00

Deposits$90.00

Total Assets$90.00


Money Supply = $190.00!



• The money multiplier is the reciprocal of the reserve ratio:

M = 1/R

• With a reserve requirement, R = 20% or 1/5,

• The multiplier is 5.


The Fed’s Tools of Monetary Control

• The Fed has three tools in its monetary toolbox:• Open-market operations ( 公開市場操作 )• Changing the reserve requirement ( 改變準備率 )• Changing the discount rate ( 改變重貼現率 )



• Open-Market Operations• The Fed conducts open-market operations when it

buys government bonds from or sells government bonds to the public:

• When the Fed buys government bonds, the money supply increases.

• The money supply decreases when the Fed sells government bonds.



• Reserve Requirements• The Fed also influences the money supply with

reserve requirements.• Reserve requirements are regulations on the

minimum amount of reserves that banks must hold against deposits.

• 最低存款準備率



• Changing the Reserve Requirement• The reserve requirement is the amount (%) of a

bank’s total reserves that may not be loaned out.• Increasing the reserve requirement decreases the money

supply.

• Decreasing the reserve requirement increases the money supply.



• Changing the Discount Rate• The discount rate is the interest rate the Fed charges

banks for loans.• Increasing the discount rate decreases the money supply.

• Decreasing the discount rate increases the money supply.


Problems in Controlling the Money Supply

• The Fed’s control of the money supply is not precise.

• The Fed must wrestle with two problems that arise due to fractional-reserve banking.• The Fed does not control the amount of money that

households choose to hold as deposits in banks.• The Fed does not control the amount of money that

bankers choose to lend.


Summary

• The term money refers to assets that people regularly use to buy goods and services.

• Money serves three functions in an economy: as a medium of exchange, a unit of account, and a store of value.

• Commodity money is money that has intrinsic value.

• Fiat money is money without intrinsic value.


Summary

• The Federal Reserve, the central bank of the United States, regulates the U.S. monetary system.

• It controls the money supply through open-market operations or by changing reserve requirements or the discount rate.


Summary

• When banks loan out their deposits, they increase the quantity of money in the economy.

• Because the Fed cannot control the amount bankers choose to lend or the amount households choose to deposit in banks, the Fed’s control of the money supply is imperfect.

10 money and prices in the long run 長期的貨幣與物價. copyright © 2004 south-western 29 the...

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