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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
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barter
the exchange of one good or service for another
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commodity money
money that takes the form of a commodity with intrinsic value
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fiat money
money without intrinsic value that is used as money because of government decree
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intrinsic value
something has value even if it is not used as money
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federal reserve
central bank of the US oversees the banking system and regulates amount of money in the economy also lender of last resort
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liquidity
ease with which an asset can be converted into an economy's medium of exchange
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m1
demand deposits, travelers checks, checkable deposits, currency
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m2
saving deposits, small time deposits and money market funds, all m1 and few minor categories
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