Monetary system

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Monetary system
2009-12-13 23:42:01
macro econ

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  1. money
    • set of assets in an economy that people regularly use to buy goods and services
    • funtions of money:
    • medium of exchange- item that buyers give to sellers to purchase goods and services
    • store of value- item that people can use to transfer purchasing power from present to future
    • unit of account- yardstick people use to record debts and post prices
  2. barter
    the exchange of one good or service for another
  3. commodity money
    money that takes the form of a commodity with intrinsic value
  4. fiat money
    money without intrinsic value that is used as money because of government decree
  5. intrinsic value
    something has value even if it is not used as money
  6. federal reserve
    central bank of the US oversees the banking system and regulates amount of money in the economy also lender of last resort
  7. liquidity
    ease with which an asset can be converted into an economy's medium of exchange
  8. m1
    demand deposits, travelers checks, checkable deposits, currency
  9. m2
    saving deposits, small time deposits and money market funds, all m1 and few minor categories