ECON-2120 Study Guide - Final Guide: List Of Countries By Real Gdp Growth Rate, Federal Funds Rate, Federal Open Market Committee

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chocolatebat785

22 Sep 2016

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Document Summary

Money is an asset that people use to make and receive payments when buying and selling goods and services. Major function: a medium of exchange: an asset that can be traded for goods and services. Related function: a store of value: an asset that enables people to transfer purchasing power into the future. If money didn"t store value for at least some period of time, then it wouldn"t be useful in exchange, since the whole point of money is to take is elsewhere to buy other stuff. Commodity money is a type of money where the asset used as money has intrinsic value in some other use besides just being used as money. Ex: gold, silver, salt, cigarettes, stone discs. Money used in large, modern, developed countries is not commodity money. Fiat money is an asset that is used as legal tender by the government decree and is not backed by a physical commodity like gold.

Related Questions

A property right is

		A social arrangement that governs the ownership, use, and disposal of anything that people value.
		An economical unit that hires production factors and organizes those factors to produce and sell goods and services.
		Any arrangement that enables buyers and sellers to get information and to do business with each other.
		Any commodity or token that is generally accepted as a means of payment.
		A medium of exchange.

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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.