Unit 4

1)      Money is any asset to purchase goods or services

2)      3 uses of money

a)      Medium of exchange

b)      Unit of account

·         How do you compare prices

c)       Store of value

3)      3 types of money

a)      Commodity money

 (1)    Salt

(2)    Olive Oil

(3)    Gold

b)      Representative money

 (1)    IOU

c)       Fiat Money

·         Money because the government says so

(1)    Paper currency and coins

4)      6 characteristics of money

a)      Durability

·         How long it will last

b)      Portability

·         Travel

1)       Divisibility

·         Divided out

2)      Uniformity

3)      Limited supply

4)       Acceptability

·         Take it anywhere

5)      Money supply

6)      Total value of financial assets available in the US economy

7)        M1 money

(1)    Liquid assets

(2)    Easily converted to cash

(3)      Cash

(4)    Paper currency

(5)   Coins

(6)  Checkable deposits or Demand Deposits (check or checking accounts)

(7)    Travelers check

8)       M2 money

(1)    M1 Money + Savings account and money market account

(a)    It isn’t sent immediately

·         Financial institution

a)      Store money

b)      Save money

c)       Loan money

·         Credit card

·         Mortgages

7)      4 ways to save money

a)      Savings account

b)      Checking accounts

c)       Money market accounts

d)      Certificate of deposit (CD)

8)      Loans