Money Makes The World Go Round Essay

1707 Words Aug 25th, 2016 null Page
It is often said that money makes the world go round. Money plays an important role in a country’s economy. Citizens must have money in order to spend money. Governments can help banks create money. In the United States (US), the Federal Reserve is responsible for controlling the money supply to keep the economy running smoothly. One must fully understand the US money and banking system to fully grasp the money market. Knowledge of items that serve as money, the effects of actions taken by the Fed to the economy, steps the Fed can take to increase the money supply, and causes for too little money or spending in a recession are important in attaining proper comprehension of the US monetary system.
In today’s world, money is used to purchase items and services. Cash is always the preferred method of payment, but is not always practical. Technological advances have allowed people to carry credit card and debit cards instead of actual money. This has led many notions that the concept of money is dying. “Money consists of anything that is regularly used in making exchanges, that is, buying and selling goods and services” (Pearson, n.d.). Credit cards and debit cards are electronic forms of money. A person enters an agreement with a credit card company to borrow money from the creditor. In return, the borrower must pay the creditor the amount borrowed plus interest. Debit cards are electronically connected to a checking or savings account and can be used by the…

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