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The Monetary System - Coggle Diagram

- - - - M = 1/R
  - - - Changing the reserve requirement
      - Changing the discount rate
      - Open-market operations
      - The BNM conducts open-market operations when it buys government bonds from or sells government bonds to the public:
        
        When the BNM buys government bonds, the money supply increases.
        
        The money supply decreases when the BNM sells government bonds.
      - Reserve Requirements
        
        The BNM also influences the money supply with reserve requirements.
        
        Reserve requirements are regulations on the minimum amount of reserves that banks must hold against deposits.
        
        Changing the Reserve Requirement
        
        The reserve requirement is the amount (%) of a bank’s total reserves that may not be loaned out.
      - Changing the Discount Rate
        
        The discount rate is the interest rate the Fed charges banks for loans.
        
        Increasing the discount rate decreases the money supply.
        
        Decreasing the discount rate increases the money supply.
- - - - A medium of exchange is an item that buyers give to sellers when they want to purchase goods and services.
      - A medium of exchange is anything that is readily acceptable as payment. Example: shells; chicken; gold, paper money, cheque etc.
    - - A unit of account is the yardstick (basis) people use to quote prices and record debts.
      - common measure of the value of goods and services being exchanged (how much something is worth).
      - Knowing the value or price of a good, in terms of money, enables both the supplier and the purchaser of the good to make decisions about how much of the good to supply and how much of the good to purchase.
    - - A store of value is an item that people can use to transfer purchasing power from the present to the future.
      - As a store of value, money is not unique; many other stores of value exist, such as land, works of art, and even baseball cards and stamps. Money may not even be the best store of value because it depreciates with inflation.
    - - “standard of deferred payment” is an acceptable way to settle a