Chapter 3 UTA MONEY AND BANKING ECON 3303

Medium of exchange

Anything used to pay for goods and services

unit of account

Anything used to measure value in an economy

Double coincidence of wants problem

yk

barter economy prices

n(n-1)/2

Store of value

A repository of purchasing power over time.

liquidity

the relative ease and speed with which an asset can be converted to cash

hyperinflation

inflation exceeds 50% per month

Commodity money

Using something inherently valuable as money; gold, silver

Fiat money

Why is it valuable? Because I said so. Often paper, can be expensive to move since it is physical

Checks

An order to a bank to transfer money from one account to another, increases efficiency by not needing to physically have or often move money, Are a bit slow though.

Electronic payment

pay electronically? like is is really that hard to imagine?

E-money

Money that only exists in electronic form- debit card for instance.

Stored Value card

Like a visa gift card

Smart card

A stored-value card that contains a computer chip that allows the card to be loaded with digital cash from the owner’s bank account whenever needed.

e-cash

Electronic money that is used on the Internet to purchase goods or services.

M1

• Demand deposits

• Checkable deposits

• Travelers checks

Monetary aggregates

The measures of the money supply (M1 and M2) used by the Federal Reserve System.

M2

• Savings deposits and money market deposit accounts

• Money market mutual funds

• M1

wealth

All resources owned by an individual, including assets

income

earnings per unit time

Token money

Money with positive seigniorage

FRN

Federal reserve notes

M3

M2 + large time deposits + institutional MMMF + RPs + Eurodollar