FUNCTIONS OF MONEY
Money
- Commodity or token
- Generally acceptable as means of payment
- i-e method of setting a debt
FUNCTIONS OF MONEY
- Medium of exchange (object that is generally acceptable in exchange for goods and services.)
- Unit of account (Agreed measure for stating the prices of goods and services.)
- Store of value ( Held and exchanged later for goods and services
IN U.S money comprises of:
- Currency (notes & coins)
- Deposits (At banks & depository institutions)
Official measures of money
M1
- Currency and travellers checks
- Checking deposits
M2
- M1
- PLUS Time deposits
- Plus Savings deposits
- Plus Money market mutual funds & other deposits
M1 is money. M2 is counted as money. Deposits are money but checks and credit cards are not.
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