ECON 2010 Chapter Notes - Chapter 29: Market Liquidity, Monetary Policy, Federal Open Market Committee

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5 May 2015
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Learning objectives: know the three functions of money, know the difference between commodity money and fiat money, know the functions of the federal reserve, understand how the money supply expands and contracts. In the: store of value an item that someone can use to transfer purchasing power. United states, this unit of measure would be the dollar. from the present to the future. Any form of modern money would be an example of this: liquidity refers to the ease with which an asset can be converted into the economy"s medium of exchange. Cash or cash equivalent is the most liquid asset. The kinds of money: commodity money is a medium of exchange with intrinsic value. Intrinsic value means that the item would have value even if it were not used as money. An economy that uses gold as money is said to be operating under a gold standard: fiat money is money without intrinsic value.

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