Chapter 29 Journal

Chapter 29 talks about the monetary system. The term money refers to assets that people regularly use to buy goods and services. They usually serve three functions: it provides the item used to make transactions as a medium of exchange, it provides the way in which prices and other economic values are recorded as a unit of account, and it provides a way of transferring purchasing power from present to the future as a store of value. Commodity money, such as gold, is money that has intrinsic value: it would be valued even if it were not used as money. Fiat money, is money without intrinsic value, it would be worthless if it were not used as money. In the U.S. economy, money takes the form of currency and various types of bank deposits. The Federal Reserve, the central bank of the U.S., is responsible for regulating the monetary system. The Fed chairman is appointed by the president and confirmed by Congress every 4 years. The chairman is the lead member of the Federal Open Market Committee, which meets every six weeks to consider changes in the policy. The Fed controls the money supply primarily through open-market operations: the purchase of government bonds increases the money supply, and the sale of government bonds decreases the money supply. They can also expand the money supply, and it can contract the money supply. Overall, this chapter was a good read. On a scale of 1-3 I would rate this chapter a 1.