Money, banks, & federal

Question 1

define money

Answer 1

asset ppl. willing to accept & exchange for goods/services or debts

Question 2

barter

Answer 2

exchange of goods/services ($ not needed)

Question 3

problem w/ bartering

Answer 3

determining worth of an exchange (if a good/service is worth this other good/service)
“double coincidence of wants” (i have to want this and you have to want what i have)

Question 4

commodity money

Answer 4

money that has value independent of its use as money

Question 5

Fiat money

Answer 5

money that ONLY has use as money (no independent value)

Question 6

commodity-backed money

Answer 6

the middle of fiat & commodity “gold times” (not really wanted. cannot be adjusted and value can change without much control)

Question 7

Functions of $

Answer 7

1. medium of exchange (trading for consumption, each good can have its own price )
2. store of value (save now have more later)
3. standard of deferred payment (borrowing/lending)

Question 8

$ Criteria

Answer 8

1. divisible
2. acceptable
3. durable
4. standardized
5. valuable (relative to weight)

Question 9

Money supply

Answer 9

measurement of $ in system (cash, checking deposits, savings, etc.)

Question 10

Two levels of money supply (M.S.)

Answer 10

M1 (narrow)
M2 (Broad)

Question 11

M1 covers..

Answer 11

• cash
  -checking deposits
• travelers checks (typically so small = ignored)

Question 12

M2 covers..

Answer 12

• all of M1
• Saving acc balance
• small denominations

Question 13

define a CD

Answer 13

“time deposit” (put 10k in and CANNOT retrieve it until a self set time ((typically a year etc.) has been accomplished so the interest can rise)

Question 14

what is not being included in M.S. ?

Answer 14

stocks, bonds, businesses, etc. because they are NOT $ itself, yes they are worth $ but they aren’t $.