Money (functions) (Macro) Flashcards
Types of money, functions and characteristic
1
Q
What are the 4 functions of money?
A
-Medium of exchange
-Store of value
-Deferred payment
-Unit of account (equate different goods)
2
Q
Necessary characteristics of money?
A
Acceptable, hard to forge, scarce, portable, durable and divisible
3
Q
What is meant by the money supply?
A
The value of the stock of money that exists in an economy at any one time
4
Q
In what form can money exist?
A
-Coins/notes
-Bank accounts (cash or savers)
-Other financial assets (narrow vs broad)
5
Q
What is meant by other financial assets?
A
Bonds (gilts), shares or treasury bills
6
Q
Difference between narrow and broad money?
A
Narrow is in terms of balances which can immediately be used as a medium of exchange (liquid) and Broad is this money and that money which is held by banks (less liquid)
