ECO372 Week 3 Weekly Reflection

Question: #7969

ECO 372 Week 3 Weekly Reflection.

Solution: #7967

ECO372 Week 3 Weekly Reflection

ECO 372 Week 3 Weekly Reflection. Week 3 Summary Team C ECO/372 In week three we learned about what money is and what it does. Money is a highly liquid financial asset that’s generally accepted in exchange for other goods, is used as a reference in valuing other goods, and can be stored as wealth (Colander, 2010, p. 313). We learned about how money is created. Banks create money by borrowing money from the public and then lending it back to public with interest. The money is created because they started with the original amount plus the amount that was loaned out minus a reserve that they have to keep. We also learned about the Federal Reserve System (The Fed), and what its purpose is.The Fed is relatively independent. It has the independence to conduct its business how it sees fit as long as it falls under the legislation established by Congress. We learned about monetary policy and how it affects the money supply and interests rates. Expansionary monetary policy is a policy that increases the money supply and decreases the interest rate. It tends to increase both investm...