accessible for a long 24-hour–maturity period of time. For instance, the small notice period, such notice periods US government measures supply as 30 days, needed before Deposits that are not by M2, and, since 2006, no longer funds can be accessed. bank decides which definition of notice periods money to use when assessing the Savings accounts with a Deposits with longer money supply. and then bought back The government or the central Deposits with short a day later. Deposit accounts Government TAKING THE MEASURE Accounts specifically for repurchase agreement OF THE ECONOMY saving money, rather than Securities that are sold for daily use. ❯❯Limited Money supply is limited by ❯❯Unlimited The government is free the supply of gold. ![]() ❯❯Redeemable Currency is redeemable ❯❯Not redeemable Fiat money is for an equivalent amount of gold. for “let it be done,” and refers to the fact that fiat money is legal ❯❯Based on a commodity The value of ❯❯Not based on a commodity Value tender only because it is backed money is tied to that of a commodity, is based on faith in the government by a government decree. The word fiat is Latin as the gold standard. GOVERNMENT FINANCE AND PUBLIC MONEY 86 87 The money supply FIAT CURRENCY VS REPRESENTATIVE CURRENCY Unlike a currency backed by a Commodity-backed Government-backed (fiat) commodity, such as gold, fiat money does not represent $ Currency used to be backed $ The state backs paper and anything, nor can it be redeemed by gold, which was known digital money-another type for a set amount of another commodity. This is money in a form that can be readily used as a medium of exchange, and includes bills, coins, traveler’s checks, and some types of bank accounts. Narrow money M0 and M1 make up the narrow money group. “He who controls the money $ supply of a Instant access nation controls savings the nation” $ Deposits in bank James Garfield accounts that allow $ ready access. $ Representative what they include or exclude, varies money that can from country to country. Physical currency Traveler’s checks How these classes are defined, and $ used as tender. These general circulation in bank reserves. ![]() The definition in banks of “broad money” includes other less Bills and coins in Hard currency held liquid, less convertible forms. Money equivalents readily converted into cash liquid, or spendable, form of money is called “narrow” money, and include M0 Physical currency in circulation Physical assets classes M0 and M1.
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