Monetary system

Home > Preview

The flashcards below were created by user Anonymous on FreezingBlue Flashcards.

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
barter

the exchange of one good or service for another
commodity money

money that takes the form of a commodity with intrinsic value
fiat money

money without intrinsic value that is used as money because of government decree
intrinsic value

something has value even if it is not used as money
federal reserve

central bank of the US oversees the banking system and regulates amount of money in the economy also lender of last resort
liquidity

ease with which an asset can be converted into an economy's medium of exchange
m1

demand deposits, travelers checks, checkable deposits, currency
m2

saving deposits, small time deposits and money market funds, all m1 and few minor categories