Clemson Econ 2120 Final Exam Questions &
Answers QUESTIONS & ANSWERS
Money
is any commodity (such as gold) or token ($10) that is generally accepted as means of payment
Commodity or Token
money is something that can be recognized, and can be divided up into small parts.
Means of Payment
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
medium of exchange, unit of account, store of value
Medium of exchange
is an object that is generally accepted in return for goods and services.
Barter
without money, you would have to exchange goods and services directly for other goods and
services and exchange.
Unit of Account
Is an agreed-upon measure for stating the prices of goods and services.
Fiat money
,is objects that are money because the law decrees or orders them to be money.
The objects that we use as money today are
currency; deposits at banks and other financial institutions
Currency
The notes (dollar bills) and coins that we use in the United States today
Deposits
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
when you get some cash from the ATM, you convert your bank deposit into currency.
Official Measure of Money:M1
consists of currency by individuals and businesses, traveler's checks, and checkable deposits
owned by individuals and businesses.
Official Measure of Money:M2
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
, (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?
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
A bank deposit that cannot be withdrawn before a date specified at the time of deposit.
M1
• Currency and traveler's checks
• Checkable deposits
M2
M1
Savings deposits
Small time deposits
Money market funds and other deposits
Are M1 and M2 Means of Payment?
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.
Answers QUESTIONS & ANSWERS
Money
is any commodity (such as gold) or token ($10) that is generally accepted as means of payment
Commodity or Token
money is something that can be recognized, and can be divided up into small parts.
Means of Payment
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
medium of exchange, unit of account, store of value
Medium of exchange
is an object that is generally accepted in return for goods and services.
Barter
without money, you would have to exchange goods and services directly for other goods and
services and exchange.
Unit of Account
Is an agreed-upon measure for stating the prices of goods and services.
Fiat money
,is objects that are money because the law decrees or orders them to be money.
The objects that we use as money today are
currency; deposits at banks and other financial institutions
Currency
The notes (dollar bills) and coins that we use in the United States today
Deposits
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
when you get some cash from the ATM, you convert your bank deposit into currency.
Official Measure of Money:M1
consists of currency by individuals and businesses, traveler's checks, and checkable deposits
owned by individuals and businesses.
Official Measure of Money:M2
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
, (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?
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
A bank deposit that cannot be withdrawn before a date specified at the time of deposit.
M1
• Currency and traveler's checks
• Checkable deposits
M2
M1
Savings deposits
Small time deposits
Money market funds and other deposits
Are M1 and M2 Means of Payment?
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.
