Unit 4 Notes - Money, Money, Money

Uses of Money

1.     Medium of Exchange – Barter or Trade

2.     Unit of Account – Economic Worth

3.     Store of Value –

Types of Money

1.     Commodity Money – Gold, Silver

2.     Representative Money – IOU

3.     Fiat Money – Money because government says so

Characteristics of Money

1.     Durability

2.     Portability

3.     Divisibility

4.     Uniformity

5.     Scarcity

6.     Acceptability

Money Supply

1.     M1 Money – Cash, Coins, Currency, Traveler’s Checks, Demand/Checkable Deposits (Checks) (Largest Component is Checkable Deposits)

2.     M2 Money – M1 Money + Savings Accounts

3.     M3 Money – M2 Money + Money Market Accounts + CDs (Certificate of Deposit)

4.     Liquidity – Easy to convert to cash