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ECN 204 (281)
Amy Peng (21)
Chapter 12

ECN 204 Chapter 12 Notes.docx

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Department
Economics
Course
ECN 204
Professor
Amy Peng
Semester
Fall

Description
ECN 204 Chapter 12 Notes The Definition and Functions of MoneyMoney is any item that is generally accepted to sellers in exchange for goods and servicesMedium of Exchange o Items sellers generally accept and buyers generally use to pay for a good or service o As a medium of exchange money allows society to escape the complications of barterMeasure of Value o Money is also a measure of value or more formally a unit of accountStore of Value o Money also serves as a store of value that makes it possible to acquire goods and services at a future date o To buy things later they store save some of their wealth as money o But a key advantage that money has over all other assets is that it has the most liquidity or spendability o Liquidity is the east with which it can be concerted quickly into the most widely accepted and easily spent for of money cash with little or no loss of purchasing power o cash is perfectly liquid by contrast a house is highly illiquid The Components of the Money SupplyMoney Definition M1 o M1 is currency coins and paper money and demand deposits in chartered
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