ECON 2120 FINAL EXAM STUDY GUIDE
Money - Answers - is any commodity (such as gold) or token ($10) that is generally
accepted as means of payment
Commodity or Token - Answers - money is something that can be recognized, and can
be divided up into small parts.
Means of Payment - Answers - is a method of settling a debt. You can buy a car with a
loan and pay the loan in the due date. Money is used to pay off the loan.
Money performs three vital functions - Answers - medium of exchange, unit of account,
store of value
Medium of exchange - Answers - is an object that is generally accepted in return for
goods and services.
Barter - Answers - without money, you would have to exchange goods and services
directly for other goods and services and exchange.
Unit of Account - Answers - Is an agreed-upon measure for stating the prices of goods
and services.
Fiat money - Answers - is objects that are money because the law decrees or orders
them to be money.
The objects that we use as money today are - Answers - currency; deposits at banks
and other financial institutions
Currency - Answers - The notes (dollar bills) and coins that we use in the United States
today
Deposits - Answers - are money because they can be converted into currency on
demand and are used directly to make payments.
Currency inside the banks is not money - Answers - when you get some cash from the
ATM, you convert your bank deposit into currency.
Official Measure of Money:M1 - Answers - consists of currency by individuals and
businesses, traveler's checks, and checkable deposits owned by individuals and
businesses.
, Official Measure of Money:M2 - Answers - consists of M1 plus savings deposits and
small time deposits, money market funds, and other deposits.consists of M1 plus
savings deposits and small time deposits, money market funds, and other deposits.
A money market fund - Answers - (also known as money market mutual fund) is an
open-ended mutual fund that invests in short-term debt securities. An investment fund
that holds the objective to earn interest for shareholders while maintaining a net asset
value (NAV) of $1 per share.
What is money market funds purpose? - Answers - is to provide investors with a safe
place to invest easily accessible cash-equivalent assets characterized as a low-risk,
low-return investment.
Time deposit - Answers - A bank deposit that cannot be withdrawn before a date
specified at the time of deposit.
M1 - Answers - • Currency and traveler's checks
• Checkable deposits
M2 - Answers - M1
Savings deposits
Small time deposits
Money market funds and other deposits
Are M1 and M2 Means of Payment? - Answers - The test of whether something is
money is whether it is generally accepted as a means of payment.
M1 passes this test and is money.
Some savings deposits in M2 are just as much a means of payment as the checkable
deposits in M1.
Checks - Answers - Not money. It is an instruction to a bank to make a payment
Credit Cards - Answers - is not money becuse it does not make a payment
Debit Cards - Answers - Not money. It is like an electronic check.
Mobile Wallet - Answers - is an electronic version of a physical wallet.
An Embryonic New Money: E-Cash - Answers - Electronic cash (or e-cash) is an
electronic equivalent of
paper notes (dollar bills) and coins.
The banking system consists of - Answers - The Federal Reserve
The banks and other institutions that accept deposits and that provide the services that
enable people and businesses to make and receive payments.
Money - Answers - is any commodity (such as gold) or token ($10) that is generally
accepted as means of payment
Commodity or Token - Answers - money is something that can be recognized, and can
be divided up into small parts.
Means of Payment - Answers - is a method of settling a debt. You can buy a car with a
loan and pay the loan in the due date. Money is used to pay off the loan.
Money performs three vital functions - Answers - medium of exchange, unit of account,
store of value
Medium of exchange - Answers - is an object that is generally accepted in return for
goods and services.
Barter - Answers - without money, you would have to exchange goods and services
directly for other goods and services and exchange.
Unit of Account - Answers - Is an agreed-upon measure for stating the prices of goods
and services.
Fiat money - Answers - is objects that are money because the law decrees or orders
them to be money.
The objects that we use as money today are - Answers - currency; deposits at banks
and other financial institutions
Currency - Answers - The notes (dollar bills) and coins that we use in the United States
today
Deposits - Answers - are money because they can be converted into currency on
demand and are used directly to make payments.
Currency inside the banks is not money - Answers - when you get some cash from the
ATM, you convert your bank deposit into currency.
Official Measure of Money:M1 - Answers - consists of currency by individuals and
businesses, traveler's checks, and checkable deposits owned by individuals and
businesses.
, Official Measure of Money:M2 - Answers - consists of M1 plus savings deposits and
small time deposits, money market funds, and other deposits.consists of M1 plus
savings deposits and small time deposits, money market funds, and other deposits.
A money market fund - Answers - (also known as money market mutual fund) is an
open-ended mutual fund that invests in short-term debt securities. An investment fund
that holds the objective to earn interest for shareholders while maintaining a net asset
value (NAV) of $1 per share.
What is money market funds purpose? - Answers - is to provide investors with a safe
place to invest easily accessible cash-equivalent assets characterized as a low-risk,
low-return investment.
Time deposit - Answers - A bank deposit that cannot be withdrawn before a date
specified at the time of deposit.
M1 - Answers - • Currency and traveler's checks
• Checkable deposits
M2 - Answers - M1
Savings deposits
Small time deposits
Money market funds and other deposits
Are M1 and M2 Means of Payment? - Answers - The test of whether something is
money is whether it is generally accepted as a means of payment.
M1 passes this test and is money.
Some savings deposits in M2 are just as much a means of payment as the checkable
deposits in M1.
Checks - Answers - Not money. It is an instruction to a bank to make a payment
Credit Cards - Answers - is not money becuse it does not make a payment
Debit Cards - Answers - Not money. It is like an electronic check.
Mobile Wallet - Answers - is an electronic version of a physical wallet.
An Embryonic New Money: E-Cash - Answers - Electronic cash (or e-cash) is an
electronic equivalent of
paper notes (dollar bills) and coins.
The banking system consists of - Answers - The Federal Reserve
The banks and other institutions that accept deposits and that provide the services that
enable people and businesses to make and receive payments.
