Economics 1022A/B Chapter Notes - Chapter 24: Commodity Money, Price Level, Exchange Rate
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ECON 1022A/B Full Course Notes
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Chapter 24: money, the price level and in ation. Money is a set of assets that is used to buy goods and services. Asset: something that can transfer purchasing power from present to future. Without money, every transaction would require a double coincidence of wants- the unlikely occurrence that people each have a good or a service the other wants. Money is the most liquid form of asset (more liquid, easier to exchange) Money is not a perfect store of value. Money has 3 functions: medium of exchange: need money to buy goods and services, unit of account, store of value: transfer purchasing power from the present to the future. *m1= currency held by public + demand deposits. *m2 = m1+ personal demand deposits + non personal demands and notice deposits. *4 and 5 are considered money/ and the most liquid form* The total quantity of money available to country is called the money supply (ms)