Full 104 page summary of Monetary Economics (ECS3701) Module Questions and Answers 2023

What is the problem with using barter for transactions? What is the advantage of using money for transactions instead of barter? - -• Requires a double coincidence of wants • Money simplifies and increases the number of market transactions • Money promotes economic growth -What are the functions of money? - -• It must... 1. Act as a medium of exchange 2. Serve as a unit of account 3. Serve as a store of value 4. Offer a standard of deferred payment -Are credit cards money? - -no -How is money measured? (Define M1 and M2.) - -• M1: the narrow definition of the money supply: the sum of currency in circulation, checking account deposits in banks, and holdings of traveler's checks • M2: broader definition; includes M1 plus savings account deposits, small-denomination time deposits, balances in money market deposit accounts in banks, and noninstitutional money market fund shares -Are loans an asset or a liability to a bank? Deposits? Reserves? - -• Loans & reserves: assets • Deposits: liabilities