Unit 4: Money

Use of Money:
- Medium of exchange: Borrow and trade
- Unit of Account: Establishes economic value
- Store of Value: Money olds value over period of time whereas products may not

Types of Money:
-Commodity Money: gets vale from type material from which it is made. Ex. Gold
- Representative Money: paper money backed by something tangible that gives it value.
- Fiat Money: money because the gov. says so.

Characteristics of Money:
- Divisible
- Portable
- Uniform
- Acceptable
- Scarce
- Durable

Money Supply:
- M1 Money: 75% of money in circulation and easy to convert.
  >Currency: Cash and coin
  >Checkable Deposit: Check-in account
  >Travelers Check: very liquid
- M2 Money: M1 money, Savings accounts and deposits held by banks outside the US.
- M3 Money: M2 money certificate of deposits AK CAs