Studied by 5 people
What are the roles of money?
Medium of exchange, store of value, unit of account
What are the types of money?
commodity blown, commodity backed money, fiat money
What are the risks of fiat money?
Counterfeiting, government officials who have the authority to print money will be tempted to abuse the privilege by printing out so much money that they create inflation
M1
The most narrowly defined money supply, equal to currency in the hands of the public and the checkable deposits of commercial banks and thrift institutions. Most liquid.
M2
Includes all of M1 and adds several other kinds of assets, often referred to as near moneys.
