4 March 2016 (Unit 4)
- Uses of money
- Medium of exchange: is what people trade for goods and services.
- Unit of account: It establish economic worth in the exchange process.
- Store of value: Money hold is value over a period of time, where as product may not
- Type of Money
- Commodity Money: Involves the use of an actual good in place of money.
- EX: Gold coin, Silver coins
- Representative Money: its a paper money back by something tangible that give it value.
- Fiat Money: there money because the government sad so.
- Characteristic of Money
- Durable
- Portable
- Divisible
- Uniform
- Acceptable
- M1 money supply: currency (coin & cash), check-able deposit (demand deposit), traveler check.
- 75% money will come from M1
- It the most liquid able (easy to break down)
- M2 money supply: M1 money + saving account + deposit held by banks out side of the U.S.
- Not really liquid able (easy to break down)
- M3 money supply: M2 + certificate of deposit they held by private institution.
- If you put your money out to early, you be penalize.
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