Chapter 3: What is Money?
M2
a measure of money that adds to M1: money market deposit accounts, money market mutual fund shares, small denomination time deposits, savings deposits, overnight repurchase agreements, and overnight Eurodollars
M1
a measure of money that includes currency, traveler's checks, and checkable deposits
store of value
a repository of purchasing power over time
smart card
a stored value card that contains a computer chip that lets it be loaded with digital cash from the owner's bank account whenever needed
wealth
all resources owned by an individual, including all assets; the total collection of pieces of property that serve to store value
hyperinflation
an extreme inflation in which the inflation rate exceeds 50% per month
medium of exchange
anything that is used to pay for goods and services; eliminates the trouble of finding a double coincidence; must be easily standardized, widely accepted, divisible, easy to carry, and not deteriorate quickly
unit of account
anything used to measure value in an economy; reduces transaction costs
e-cash
electronic money that is used on the Internet to purchase goods or services
commodity money
money made up of precious metals or another valuable commodity
electronic money
money that exists only in electronic form and substitutes for cash as well (e-money)
fiat money
paper currency decreed by a government as legal tender but not convertible into coins or precious metal
currency
paper money (such as dollar bills) and coins
income
the flow of earnings per unit of time (a flow concept)
monetary aggregates
the measures of the money supply used by the Federal Reserve System (M1 & M2)
payments system
the method of conducting transactions in the economy
liquidity
the relative ease and speed with which an asset can be converted into cash