Money & Banking CH.3

The M1 measure of money includes

traveler's checks

which of the following is included in both m1 and m2

currency

As a store of value, money

is a way of saving for future purchases

If there are four goods in a barter economy, then one needs to know ________ prices in order to exchange one good for another

6

A hyperinflation is

a period of extreme inflation generally greater than 50% per month

money is

anything that is generally accepted as payment for goods and services or in the repayment of debt

Compared to checks, paper currency and coins have the major drawbacks that they

are easily stolen

________ money could be used for some other purpose other than as a medium of exchange, for example, gold coins could be melted down and turned into gold jewelry

commodity

For a commodity to function effectively as money it must be

easily standardized, making it easy to ascertain its value

a fall in the level of prices

increases the value of money

All of the following are necessary criteria for a commodity to function as money except -it must deteriorate quickly. -it must be divisible. -it must be easy to carry. -it must be widely accepted

it must deteriorate quickly

money aggregates are

measures of the money supply reported by the federal reserve

Currency includes

paper money and coins

Although ________ currency is lighter than coins made of metals, a disadvantage arising from modern technology is the ease of ________.

paper;counterfeiting

because it is a unit of account, money

reduces the number of prices that need to be calculated.