Unit 4 03/04/16

Unit 4 03/04/16

• 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.
• EX: I    O   U

• 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.