Steps
1. Complete the assigned readings for this unit.
2. Read the article found at the website provided in Materials below.
3. Post a 100- to 150-word answer for each of the following questions:
Credit cards and travelers' checks are widely accepted as a medium of exchange. Should they be considered part of the money supply? Explain while describing the measures of the money supply.
One of the functions of the Federal Reserve Bank is to control the nation's money supply. Another is to be the banker of last resort for the banking system. Contrast the role of the Federal Reserve with that of other financial institutions.
Can an economy have too much money? If so, what happens when an economy has too much money? Can you give a historical example when there was too much money in the economy and how it was handled?
Is it possible to have inflation without monetary expansion in the short run and long run? What happens to the reverse monetary expansion without inflation? Explain.
Materials
The material below will help you complete this assignment.
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To answer the questions provided, you will need to gather information from the assigned readings and the article found on the specified website. Follow these steps to complete the assignment:
1. Start by completing the assigned readings for this unit. These readings will provide you with the necessary knowledge and understanding of the topics discussed in the questions.
2. Access the website provided in the "Materials" section to read the relevant article. Make sure to read it carefully and take note of any important information or arguments presented.
3. For each of the questions, write a 100- to 150-word answer. Make sure to explain your reasoning and support your answer with evidence from the readings and the article.
Question 1: Credit cards and travelers' checks are widely accepted as a medium of exchange. Should they be considered part of the money supply? Explain while describing the measures of the money supply.
In your answer, explain the concept of a medium of exchange and discuss whether credit cards and travelers' checks should be included in the money supply. Describe the different measures of the money supply, such as M1, M2, and M3, and their components.
Question 2: One of the functions of the Federal Reserve Bank is to control the nation's money supply. Another is to be the banker of last resort for the banking system. Contrast the role of the Federal Reserve with that of other financial institutions.
In your answer, compare and contrast the role of the Federal Reserve with that of other financial institutions. Explain how the Federal Reserve controls the country's money supply and why it serves as the banker of last resort. Discuss the functions and responsibilities of other financial institutions, such as commercial banks and investment banks.
Question 3: Can an economy have too much money? If so, what happens when an economy has too much money? Can you give a historical example when there was too much money in the economy and how it was handled?
In your answer, discuss whether an economy can have an excessive amount of money. Explain the impact of having too much money in the economy, such as inflation and other economic consequences. Provide a historical example where there was an excess of money in the economy and describe how it was managed or resolved.
Question 4: Is it possible to have inflation without monetary expansion in the short run and long run? What happens to the reverse monetary expansion without inflation? Explain.
In your answer, explain the relationship between monetary expansion and inflation. Discuss whether inflation can occur without an increase in the money supply in both the short run and the long run. Additionally, explain what happens when there is a reverse monetary expansion, that is, a decrease in the money supply without causing inflation.
Remember to support your answers with evidence and examples from the assigned readings and the article from the provided website. Properly cite any sources you use to avoid plagiarism.