Course

Money

Instructor: Alex Tabarrok, George Mason University

This is " The U.S. Money Supplies " from our Principles of Economics: Macroeconomics course. What is money? That may seem like a really simple question, but it’s

This is "The U.S. Money Supplies" from our Principles of Economics: Macroeconomics course.

What is money?

That may seem like a really simple question, but it’s actually kind of complicated. Paper bills and coins, or currency, is obviously money. But it doesn’t end there.

Technically, “money” is anything that is a widely accepted means of payment. This has changed throughout history. Once upon a time, cattle could be considered money. Or cowry shells. Today, cryptocurrencies like Bitcoin are being added to the mix.

Given that there’s no set definition for what makes a commodity money, there are a few measurements for the U.S. money supplies. The first, MB (or “monetary base”) measures currency and reserve deposits. This is what the Fed has the most direct control over.

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