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8/18/2019 The Monetary System-JM
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The Monetary
System
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The Meaning of
MoneyMoney- The set of assets in aneconomy that people regularly use tobuy goods and service from other
people.
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The Functions of
Money• Medium of Exchange- An item that buyers give tosellers when they want to purchase goods andservices.
• Unit of Account- The yardstick people use to postprocess and record debts.
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The Functions of
Money• tore of !alue- An item that peoplecan use to transfer purchasing powerfrom the present to the future.
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The Kinds of Money• "ommodity Money- Money that takes
the form of a commodity withintrinsic value.
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The Kinds of Money• #iat Money- money without intrinsic
value that is used as money becauseof government decree.
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Money in PhilippineEconomy
• Money tock- The $uantity of moneycirculating in the economy.
%. "urrency-The paper bills and coins in
the hands of the public.
&. 'emand deposits-(alances in bankaccounts that depositors can access
on demand by writing a check.
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The Banko Sentral ngPilipinas
• (anko entral ng )ilipinas- The centralbank of the )hilippines.
• "entral bank- An institution designed to
oversee the banking system and regulate the$uantity of money in the economy.
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The BSP Organization
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BSP Jo• *egulation of banks to ensure the
health of the nation+s bankingsystem.
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BSP Jo• "ontrol the $uantity of money
available in the economy.
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Monetary Policy• Money upply- The $uantity of
money available in the economy.
• Monetary )olicy- The setting ofmoney supply by policymakers in thecentral bank.
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Tools of Monetary!ontrol
• ,pen Market ,perations Thepurchase and sale of governmentbonds.
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Tools of Monetary!ontrol
• *eserve *e$uirements *egulationson the minimum amount of reservesthat banks must hold against
deposits
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Tools of Monetary!ontrol
• 'iscount *ate The interest rate onthe loans that () makes to banks.
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