ECO100Y5 Lecture Notes - Lecture 13: Overnight Rate, Bank Charge, Output Gap

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2 Sep 2016

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Money serve as a medium of exchange. It needs to have the 3 most important functions: money as a store value. Money allows a value to be stored easily if you don"t use all your dollars to buy goods today, you can hold the rest to use for the future. Price level is stable, the purchasing power of a given sum of money is also stable. Price level is highly variable, so is the purchasing power of money, and the usefulness of money as a store of value is undermined: money as a unit of account. This function givers buyers and sellers a way of measuring value in the economy in terms of money: money as a medium of exchange. To helps sellers to accept it in exchange for a good or service. If there is no money, we have to barter (a system in which goods and services are traded directly for other goods and services)

Related Questions

1. To say money is socially defined means that:

A) the money supply includes all public and private securities purchased by society.

B) whatever performs the functions of money extremely well is considered to be money.

C) society, acting through Congress, specifies what shall be included in the money supply.

D) money has been defined in a Constitutional amendment.

2. Money functions as:

A) a medium of exchange.

B) a store of value.

C) a unit of account.

D) all of these.

3. If you are estimating your total expenses for school next semester, you are using money primarily as:

A) a store of value.

B) an economic investment.

C) a unit of account.

D) a medium of exchange.

4. If you place a part of your summer earnings in a savings account, you are using money primarily as a:

A) medium of exchange.

B) store of value.

C) standard of value.

D) unit of account.

5. If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as:

A) a store of value.

B) a medium of exchange.

C) a unit of account.

D) an economic investment.

6. A $70 price tag on a sweater in a department store window is an example of money functioning as a:

A) standard of deferred payments.

B) medium of exchange.

C) unit of account.

D) store of value.

7. Stock market price quotations best exemplify money serving as a:

A) index of satisfaction.

B) store of value.

C) medium of exchange.

D) unit of account.

8. Purchasing common stock by writing a check best exemplifies money serving as a:

A) medium of exchange.

B) unit of account.

C) index of satisfaction.

D) store of value.

crimsonalligator541

In defining money as M1, economists exclude time deposits because:

a. the intrinsic value of time deposits is nil.

b. the purchasing power of time deposits is much less stable than that of checkable deposits and currency.

c. they are not directly or immediately a medium of exchange.

d. they are not recognized by the Federal government as legal tender.

redturtle964

Question 2 (3 points) If an individual bank receives $100,000 in new deposits and the required reserve ratio is 10 percent, the bank must keep the following amount of required reserves with the Fed?

$90,000.

$1,000,000. '

Zero.

$10,000.

Question 3 (3 points) Assume that the Fed purchases $10 million in bonds from a bank, the monetary base will:

Increase by $10 million.

Remain unchanged.

Decrease by $10 million.

Increase by $5 million.

Question 4 (3 points) When we say that money has a function as a medium of exchange, this implies that:

Money must be in the form of a precious metal such as gold.

Money must be set at a fixed exchange rate in international currency markets.

Money is backed by the gold standard.

Money is used to purchase goods and services rather than resorting to barter.

Question 5 (3 points) Which of the following is not considered an asset for a bank:

Customer deposits.

U.S. government treasury bills.

Corporate loans.

U.S. government-issued debt.

amberbeaver601

ECO100Y5 Lecture Notes - Lecture 13: Overnight Rate, Bank Charge, Output Gap

ECO100Y5 Full Course Notes

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