4.3 Definition, Measurement, and Functions of Money

Money makes it possible to ____ the value of goods and services, and interest rates provide a measure of the ____ of money that is borrowed or saved.

• compare, price/cost

• pay for, profit

• price/cost, compare

• reduce, inflation

Tags

MEA-3

What 3 things must any currency/money be able to do?

• A unit of account

• A store of value

• A medium of exchange

• The thing you used to have before a wife and kids

Money is any ___ that is accepted as a means of payment.

The money supply is ____ using monetary aggregates designated as M1 and M2.

The monetary base (often labeled as M0 or MB) includes currency in circulation and ______.

Match the following Money supplies

• M1 + Certificates of Deposit + US dollar deposits in foreign banks + Money Market Accounts

• M1

• Reserves + Currency in circulation

• M2

• Currency in Circulation + Checking Account Balances + Savings Account Balance

• M0 (usually known as MB)