Chapter 6 The Monetary System

LECTURE VIDEO学习视频3:

The quantity of money circulating in the economy is sometimes called the money stock.

The most obvious asset to include is currency: the paper bills and coins in the hands of the (non-bank) public.

Besides currency, many stores also accept payment with debit cards or electronic payment. The account balances that lie behind debit cards and electronic payment are demand deposits. 

Hence, the money stock also inlcude demand deposits: balances in bank accounts that depositors can access on demand by writing a check or swiping a debit card at a store.

Measures of the U.S. Money Supply

M1:  currency, demand deposits, traveler’s checks, and other checkable deposits.

M2:  everything in M1 plus savings deposits, small time deposits, balances in money market mutual funds, and a few minor categories.

M1 includes the most liquid monetary assets; M2 includes more assets than M1, however the liquidity of M2 is less than that of M1.

Measures of the Money Supply in CHINA

M0＝currency

M1＝M0+corporate demand deposits

M2＝M1+time desposits+saving deposits+other deposits+customer margins in securities firms.