PPT with worked examples to follow
9.4 Money and banking
9.4.1 definition, functions and characteristics of money
9.4.2 definition of money supply
9.4.3 quantity theory of money (MV = PT)
9.4.4 functions of commercial banks:• providing deposit accounts (demand deposit account, savings account)• lending money (overdrafts, loans)• holding or providing cash, securities, loans, deposits, equity• reserve ratio and capital ratio• objectives of commercial banks: liquidity, security, profitability
9.4.5 causes of changes in the money supply in an open economy:• commercial banks as sources of credit creation and the bank credit multiplier• role of a central bank• government deficit financing• quantitative easing• changes in the balance of payments
9.4.6 policies to reduce inflation and their effectiveness
9.4.7 demand for money: liquidity preference theory
9.4.8 interest rate determination: loanable funds theory and Keynesian theory
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