Chapter 2. Money and the Monetary System
Chapter Learning Objectives:
AFTER STUDYING THIS CHAPTER, YOU SHOULD BE ABLE TO:
Describe the three ways in which money is transferred from savers to businesses.
Identify the major components of the monetary system.
Describe the functions of money.
Give a brief review of the development of money in the United States.
Describe major types of money market securities.
Briefly explain the M1, M2, and M3 definitions of the money supply.
Explain possible relationships between money supply and economic activity.
Comment on developments in the international monetary system.
Where We Have Been. . .
In Chapter 1, we provided a general overview of the financial environment. We also hope that we provided you with a convincing argument as to why you should study finance. You should also know what is required for a financial system to be effective, know the types of financial markets that are available to aid the transferring of financial assets, and have a basic understanding of some of the factors that contributed to the 2007–09 financial crisis. Finally, you should now have some idea of the career opportunities that are available in finance.
Where We Are Going. . .
As we progress through Part 1, we build on our understanding of the U.S. financial system. Chapter 3 focuses on understanding the importance of depository and other institutions in the financial system. We discuss how your savings are pooled with the savings of other individuals in financial institutions ...
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