macro ch 30

Question 1

Medium of exchange

Answer 1

an item buyers give to sellers when
they want to purchase goods and services.

Question 2

Unit of account

Answer 2

the yardstick people use to post prices and
record debts. allows us to compare the values of goods

Question 3

Store of value

Answer 3

an item people can use to transfer purchasing
power from the present to the future

Question 4

what are the two kinds of money

Answer 4

Commodity money: has value beyond being a medium of exchange. The good has a function more than just serving as money

Fiat money: has no intrinsic value, its value is given like actual USD

Question 5

what is the money supply

Answer 5

the quantity of money available

Currency: anything in the hands of the PUBLIC (cash, coins)

Demand deposits: balances in bank accounts that
depositors can access on demand by writing a check.

Question 6

what are the measures of the US money supply

Answer 6

M1: currency, demand deposits, traveler’s checks, and other
checkable deposits.

M2: everything in M1 plus savings deposits, small time deposits,
money market mutual funds, and a few minor categories.

Question 7

Central bank

Answer 7

an institution that oversees the banking system
and regulates the money supply (through its monetary
policy)

The US central bank is called the federal reserve (the fed)