Ch. 29

Chapter 29 is about the monetary system and how it works. The chapter really focuses on the Federal Reserve and how it pumps money into currency but can also retract it. It also discusses the purposes and forms of money. Overall, the chapter was pretty easy to understand, but some of the ideas are pretty novel, and I think going more in depth with them in class will clear up any questions. The chapter defines money, assets that people regularly use to buy good and services, and explains its three functions: medium of exchange, unit of account, and a store of value. The distinction between commodity (intrinsic value) and fiat (no intrinsic value) money makes sense, especially given the examples, and the various forms money takes, like currency and bank deposits. The purpose of the Federal Reserve, being the central bank of the United States, wasnt too difficult to grasp, but the T-accounts were a bit confusing because we had never discussed them. The more we work with them, the more I'll understand them, I think. I do understand how banks make money, and how the Fed controls the circulation of money.