ECON 104 Study Guide - Transaction Account, Commercial Bank, Mutual Fund
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Mcbr chapter 12 review questions: money is what money does. Answer: this refers to the idea that money (at least paper money and checks) has no intrinsic value. It is valuable only in terms of its acceptability in exchange for goods and services. Answer: both m1 and m2 are definitions of the economy"s money supply. M1 is the definition of the money supply with the highest degree of liquidity, the money supply used mainly for transactions purposes. M1 consists of currency (coins and paper money) and checkable deposits. M2 consists of everything in m1 plus noncheckable savings deposits, small time deposits, money-market deposit accounts and money-market mutual fund balances. M2 is a broader, but less liquid, definition of the money supply. It includes everything in m2 plus large time deposits (,000 or more). Answer: a commercial bank differs from a savings and loan association primarily in the type of loans each is allowed to make.
