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Monetary Economics

Monetary Economics studies money as an institution, meaning that money is studied as a human construct that serves different purposes. In monetary economics, money serves three purposes: it is used as a medium of exchange, a store of value, and a unit of account. To best analyze how money functions in an economy, the basic role and characteristics of money are studied, which dates back to 1200 B.C, when our ancestors exchanged commodities to obtain something else of value¹. Over time, paper currency, known as fiat currency, was brought about and began to be produced rapidly and in large quantities. Based on historical events that impacted our own lives, we can see how inflation was caused by how money was being made and used¹.

Monetary economics falls under macroeconomics because it focuses on how money impacts the economy as a whole. Money both causes and shows the growth or decline of an economy, therefore relating to the bigger picture of economics². This area of economics studies the effect monetary systems have on an economy and like any market, it falls under the law of supply and demand. A monetary system is how the government controls the money supply, which is by setting up policies and institutions. Fiat money, money that is intrinsically worthless and inconvertible, is used to study monetary economics to because it cannot be used for anything else (unlike gold, which has other values)².



1. Boughton, James R., and Elmus R. Wicker, 1975. The Principles of Monetary Economics.
2. Ragan, Chrisopher. Macroeconomics/Christopher T.S. Ragan, Richard G. Lipsey. – 13th Canadian ed.

Categories within Monetary Economics

Monetary Policy

Postings: 201

Monetary policy is how the central banks and other regulators control the supply of money within a country.

Fiscal Policy

Postings: 138

Fiscal policy is how the government manages economic activity on a macroeconomic scale by controlling tax levels, and public expenditure.

What to Include when Calculating M1 and M2

Given the following information for November 2010, calculate the amounts of M1 and M2 in November 2010. The amounts are in billions of dollars. Currency $915.0 Demand deposits 507.0 Money market mutual 711.1 funds (retail only) Other checkable deposits 405.2 Savings deposits, including 5,317.9 money market

Robert E. Lucas' Economic Philolosophy

Who was Robert E. Lucas, Jr and what was his economic philosophy? What is the Lucas Critique, and how does it relate to his philosophy? How did Lucas contribute to the development of the Keynesian economics? What was his concern with economic growth and development? Did he focused on USA economics only or did he a

Microeconomics and Macroeconomics Research

This task involves a case study to describe microeconomic research (such as whether Microsoft is a monopoly or not). And in the macroeconomic environment, discussing the effectiveness of the monetary policy in the U.S. and other countries. Please assist in explaining a concept of these theories.

Exchange Rate Considerations

Please help me address the following case: Mr. Swanson has expressed confusion about how foreign exchange rates will affect Content Cow Dairy if it expands to international markets. You tell Mr. Swanson that he has raised a good question and that you will draft and send him a report with information on this topic. In your

Fiscal and Monetary Policy

Explain the following scenarios. Determine if these represent fiscal policy or monetary policy, or neither fiscal or monetary policy not all government decisions are macro-economic in nature. a.) President Obama, through the EPA, and with the agreement of the automobile companies, increased the mileage requirements for autom

Monetary and Fiscal Policy

Federal Reserve Bank of San Francisco. (2004). U.S. Monetary Policy: An Introduction. Retrieved on September 1, 2011 from: The U.S. Government Printing Office Published a "A Citizen's Guide to The Federal Bugdet." While this is not available for more

Mission in monitoring, money lending, technical assistance

The International Monetary Fund (IMF) provides assistance to countries experiencing economic woes. Discuss how, through the use of research and statistical analysis, the IMF achieves its mission of the following: Surveillance and monitoring Money lending Technical assistance

International Monetary Fund

Visit the International Monetary Fund's (IMF) website and explore the inter-workings of the organization and the areas they are working on. Choose a topic of interest and then provide a "mini lecture and example". I have chosen the IMF's interaction with Advanced Economies' for the mini lecture and example (see attachment).

Federal Reserve: Reasons for bank regulations, effect of policies

Assignment Overview In the individual assignment due this week, students explore the reasons behind regulating banks and how that regulation relates to the formation of the Federal Reserve System. Students demonstrate an understanding of the effects Federal Reserve policies have on interest rates, financial markets, and finan

The effect of economic policies on sales

Analysis of the effects of government economic policies could have on the sales of the Escalade. This document is designed to examine the effects of lowering taxes, increasing government spending, and lowering interest rates would have on sales of the escalade. This document will examine each of these variables seperately.

Floating vs. Fixed Exchange Rates

In the past, the value of currency was determined on the basis of the value of gold. Over a period of time, the temptation to return to a gold standard has been raised and debated. A fixed rate of exchange has the risks associated with the exchange rates and fiscal policies. In contrast, floating rates introduce new opportunitie

Money demand help is provided.

What would be the effect of each of the following on the money demand, M1 (with other things held equal)? a. An increase in real GDP b. An increase in the price level c. A rise in the interest rate on savings accounts and treasury securities. d. A doubling of all prices, wages, and incomes (calculate the ecact effect on the

World wide recession

Please explain how would tightening regulations and a balance monetary policy ensure the global economy does not experience severe economic shock that would lead to a world wide recession. Please give examples. Thanks

Roles Played by WTO, IMF and World Bank in the World Economy

Analyze the roles played by the World Trade Organization (WTO), International Monetary Fund (IMF), and World Bank in the world economy. Why do their actions often generate hostility, and is it deserved? Explain your answer. It has been argued that "The criterion for Bank resource transfers should not be poor people, but poor

International Financial Management: Example Problem

Compare and contrast the four currency translation methods. Which two methods are used by FASB 52? Be sure to discuss the two step method used in FASB 52 and how highly inflationary economies (around 100% inflation in a three year period) are handled. Discuss how Japan and Germany approach the translation of currency.

Distinguish between Monetary and In-Kind Payments

Distinguish between monetary and in-kind payments. Describe the relationship between compensation and non-compensation subsystems of the reward system. Describe whether monetary and in-kind payments are sources of motivation? If they are not, defend your answer.

Role of Central Banking

1. How does the Central Bank control bank lending? 2. Does the Central Bank have a Monetary Policy? 3. How does the Central Bank measure the money supply in the COUNTRY? 4. Does the Central Bank have an interest rate policy? 5. What functions of Central bank control the money supply ? 6. What functions of Cen

Money multiplier

How does the money multiplier differ when currency holdings are zero, compared to when currency holdings are greater than zero?

Questions on Economic Acts

1. Laws governing business practices made which of the following illegal? a. The Clayton Antitrust Act declared horizontal mergers illegal. b. The Sherman Antitrust Act made price discrimination, tie-in contracts, and interlocking directorships illegal when their effect was to lessen competition. c. The Celler-Kefau

Economic Indices used to Forecast Sales in the Power Tools Industry

Use these websites as a reference:

Federal Reserve

How did the Federal Reserve acquire its role as monetary policy "decider"? Also, see the attached essay.

Variables in risk, budget deficits & inflation

1. Which are the three most important variables that determine the level of country risk? 2. Which of the following three variables has the strongest impact on a country risk analysis: nationalism, religious fundamentalism, or political system? Please explain to me. 3. When is country risk analysis a critical factor for a busi

Global Managerial Economics

Details: Your cousin's latest interest is The International Monetary Fund, about which you are now chatting online. The IMF was established by the United Nations in 1944 to provide loans to countries in financial distress at a relatively low interest rate. Nations having balance-of-payments problems can borrow from the IMF fo