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Macro > What is money? What is not money? > Flashcards

What is money? What is not money? Flashcards

1
Q

A $10 bill

A

Fiat Money

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2
Q

Gold in the 19th Century

A

Commodity Money

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3
Q

Gold today

A

A financial asset that is not money

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4
Q

A nickel and penny

A

Fiat Money

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5
Q

In N Out French Fries

A

None of the above

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6
Q

Postage Stamps

A

None of the above

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7
Q

Traveler’s Checks

A

Bank Money

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8
Q

“Soups” in the Santa Cruz County Jail

A

Commodity Money

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9
Q

Deposit in a bank savings account

A

A financial asset that’s not money

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10
Q

A blank check

A

None of the above

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11
Q

Salt, at times in the past

A

Commodity Money

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12
Q

Historically, cacao nibs in Mexico

A

Commodity Money

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13
Q

A 6 month CD account

A

A financial asset that’s not money

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14
Q

Shares of stock of IBM

A

A financial asset that’s not money

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15
Q

Deposits in a checking account

A

Bank Money

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16
Q

Whiteboard markers

A

None of the above

17
Q

What is money?

A

Money is a financial asset (and thus acts as a store of value) that people use to purchase goods and services (medium of exchange)

18
Q

What does M1 money mean?

A

That only currency (paper bills and coins) and checkable deposits in banks (which includes travelers checks) shall be considered money.

19
Q

Money has three functions in the economy. What are the?

A

Money is a medium of exchange, a unit of account and a store value.

20
Q

Medium of exchange

A

an item that buyers give to sellers when they want to purchase goods and services. This is one of the three functions of money.
Ex: When you buy a shirt a shirt at a clothing store, the store gives you the shirt and you give the store money.

21
Q

Unit of Account

A

The yardstick (measurement) people use to post prices and record debts. This is also one of the three functions of money.

22
Q

Store of Value

A

an item that people can use to transfer purchasing power from the present to the future. This is also one of the three funtions of money.
Ex: When a seller accepts money today in exchange for a good or service, that seller can hold the money and become a buyer of another good or service at another time

23
Q

Liquidity

A

The ease with which an asset can be converted into the economy’s medium of exchange.

24
Q

Wealth

A

A term that is used to refer to the total of all stores of value, including both money and non-monetary assets

25
Q

When money takes the form of a commodity with intrinsic value, it is called

A

Commodity money
Ex: In prisioner war camps during WWII, prisioners traded goods and services with one another using cigarettes as the store of value, untit of account and medium of exchange. Even non smokers were happy to accept the cigarettes in an exchange, knowing that they could use the cigarette to buy other goods and services.

26
Q

What does it mean if an economy is operating under a “gold standard?”

A

It means the economy uses gold as money (or paper money that is convertible into gold on demand).

27
Q

Fiat Money

A

Money without intrinsic value that is used as money because of government decree

28
Q

Define currency

A

The paper bills and coins in the hands of the public.

29
Q

True or False? Currency is the most widley accepted medium of exchange in our economy.

A

True

30
Q

Balances in bank accounts that depositors can access on demand by writing a check.

A

Demand deposits

31
Q

What three things happen if there is a surplus of money?

A
  1. People splurge, trying to spend their excess money.
  2. Prices rise from the splurging, more than normal spending
  3. Prices rising means the value of money is falling
32
Q

What three things happen if there is a shortage of money?

A
  1. People hoard their money, trying to acquire their shortfall.
  2. Prices fall from the hoarding, people spending less than normal
  3. Prices falling means the value of money is rising.
33
Q

an item that buyers give to sellers when they want to purchase goods and services. This is one of the three functions of money.

A

Medium of exchange

34
Q

an item that people can use to transfer purchasing power from the present to the future. This is also one of the three funtions of money.
Ex: When a seller accepts money today in exchange for a good or service, that seller can hold the money and become a buyer of another good or service at another time

A

Store Value

35
Q

The yardstick (measurement) people use to post prices and record debts. This is also one of the three functions of money.

A

Unit of Account

Macro (8 decks)

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