Chapter 29

The main focus of chapter 29 is the monetary system, in which the chapter explains how money is made and used by governments, while discussing the different types of systems that might be in place if a common medium was made, talking about the bartering system and its inefficiency based on what two people are looking for in particular times. It describes what money actually is, along with the different types of money that is available to use based on how the country's economy is, either being fiat money or commodity money. Money is the economy’s most liquid asset available. Commodity money is when money is when money takes the form of a commodity with intrinsic value. Intrinsic value means the item would have value even if it were not used as money, such as gold for example. Fiat money is money without intrinsic value that is used as money because of government decree. Paper dollars fall into this category because they are backed by the government. The money stock is the quantity of money circulating in the economy. Currency is the paper bills and coins in the hands of the public. Demand deposits are balances in the bank that depositors can access on demand by writing a check. The Fed is the central bank of the U.S and is designed to regulate the quantity of money in the economy and oversee banking.