Exploring Money Measurement

1. Some of the following are stock measurements and some are flow measures. Place a check in front of those that are stock measurements.

a. The number of students attending class now

b. The number of meals served in the school cafeteria

c. The number of apartments built in Cook county in June

d. The number of tons of steel in the Empire State building

e. The population of the United States

f. The number of births in Montana in 1987

2. Should food stamps be counted as part of the money stock? Should thousand dollar bills? Credit limits that people have with credit cards? A Wal-Mart gift card with a balance of $50? Explain your reasoning in each case. (Comment: Food stamps are now in the form of a debit card. When they were paper, banks could use them as equivalent to currency in meeting the reserve requirements (which we will discuss in the next chapter) even though they were not counted as part of money stock.)

3. Money stock data do not excite people the way it once did, but you can still find it. What is U.S. money stock according to the various measures of money (M1, M2, etc.)? You should be able to find them at <http://www.federalreserve.gov/releases/H6/Current/>

By what percentage has money stock changed in the past three months? In the past year?

4. In the United States two of the main ways of electronically transferring funds in the banking system are Fedwire and the Automated Clearing House (ACH) payments system. Search the Internet and explain what each is used for and how they differ.