money and the money supply

Question 1

functions of money

Answer 1

-medium of exchange
-store of value (can’t go bad)
-measure of value
-standard of deferred payment

Question 2

characteristics

Answer 2

-acceptable
-portable
-durable
-divisible
-limited supply
-difficult to forge

Question 3

types of money

Answer 3

-notes and coins
-deposits
-near money: non-cash assets (bonds)

Question 4

liquidity

Answer 4

ease of money being converted to cash

Question 5

the money supply

Answer 5

-total amount of money circulating in the economy
-narrow: m0, total amount of notes and coins and deposits in bank accounts
-broad money: m4, everything more liquid and non-cash financial assets, can turn into cash within 5 years