AE 322 Financial Markets: Mrs. Carazelli A. Furigay, Mba
AE 322 Financial Markets: Mrs. Carazelli A. Furigay, Mba
AE 322 Financial Markets: Mrs. Carazelli A. Furigay, Mba
FINANCIAL MARKETS
MODULE 2
MRS. CARAZELLI A. FURIGAY, MBA
MONEY: A UNIQUE FINANCIAL INSTRUMENT
MONEY
⮚ the set of liquid assets that are generally accepted in exchange for goods and
services.
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FUNCTIONS OF MONEY
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FUNCTIONS OF MONEY
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FUNCTIONS OF MONEY
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DEMAND AND SUPPLY OF MONEY
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FACTORS AFFECTING MONEY HOLDINGS
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NOMINAL INTEREST RATE OF
INVESTMENT ASSETS
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FACTORS AFFECTING MONEY HOLDINGS
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MONEY SUPPLY
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INTEREST RATES AND THE SUPPLY AND DEMAND OF MONEY
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MONEY
• MARKET
• The Money Market: The equilibrium interest
rate is found where the demand for money
intersects the supply of money. The money supply
curve is vertical since the Central Bank controls
the supply of money (thus it is independent of the
interest rate). If the Central Bank increases the
money supply, interest rates will fall, as illustrated
by the fall in interest rates from I0 to I1.
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MONETARY POLICY
• is the use of the money supply to stabilize the
economy. The Central Bank uses monetary policy
to increase or decrease the money supply in an
effort to promote price stability and full
employment. Click icon to add picture
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THE CENTRAL BANK CONTROLS THE MONEY SUPPLY
THROUGH: OMO
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CHANGES IN THE DISCOUNT RATE
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CHANGES IN THE REQUIRED RESERVE
RATIO (RRR)
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MONETARY POLICY AND ITS EFFECTS
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BSP
MONETARY POLICY
VIDEO
Click icon to add picture PRESENTATIONS
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