3/20 Money and Monetary Policy
Uses of Money- Medium of Exchange
- Unit of account
- Store of Value
3 Types of Money
- Representative Money - represents something of value, i.e. IOU's
- Commodity Money - something that performs the functions of money and has alt. uses, i.e. salt
- Fiat Money - money b/c govt'/society says so, i.e. Paper Money, Coins
6 Characteristics of Money
- Durability
- Portability
- Visibility
- Uniformity
- Limited Supply
- Acceptability
Barter System - goods/services traded directly, no $ xchanged
Money - anything generally accepted in payment for goods/services
Wealth - total collection of assets that store value
Income - a flow of earnings per unit of time
Liquidity - ease w/ which an asset can be accessed and collected to cash(liquidized) - L
3 Types of Money Supply
- M1 money - High L, coins, currency, checkable deposits(checks) ( largest component)
- M2 money - Medium L, M1 + savings deposits, time deposits, certificates of deposits and mutual funds below $100K
- M3 money - Low L, M2 + time deposits above $100K
No comments:
Post a Comment