The Meaning of Money

Vocabulary flashcards related to the meaning of money.

Medium of Exchange

Item that buyers give to sellers when they want to purchase goods and services.

Unit of Account

Yardstick people use to post prices and record debts.

Store of Value

Item that people can use to transfer purchasing power from the present to the future.

Barter System

A world without money that relies on the double coincidence of wants.

Commodity Money

Money that takes the form of a commodity with intrinsic value, such as the gold standard or paper money convertible into gold.

Fiat Money

Money without intrinsic value, used as money because of government decree.

M1

A measure of the money stock that includes currency, demand deposits, other checkable deposits, and traveler’s checks.

M2

A measure of the money stock that includes everything in M1, savings deposits, small time deposits, money market mutual funds, and a few minor categories.