READINGS FOR TOPIC 5: The Role of Money and the Banking System
Required Readings:
- Sexton, Chapter 29, especially pp.311-323
- The Wall Street Journal
Additional Readings:
- Michael Specter, “Capitalizing on Yankee Ingenuity,” on Blackboard.
- R. A. Radford, “The Economics of a POW Camp,” on Blackboard.
STUDY QUESTIONS FOR TOPIC 5:
- What is money? What are the functions of money? What is liquidity?
- Explain how the existence of money improves the workings of an economy.
- What are financial markets? How do they improve the workings of an economy?
- What is a bank? What is a thrift? What important economic functions do they serve?
- How do we measure the supply of money?
- What is the difference between M1, M2, and M3?