tailieunhanh - Lecture Economics - Chapter 24: Money and the federal reserve system

Money can be anything that meets these three tests. Money must serve as a medium of exchange, a unit of account, and a store of value. In this chapter, you will learn to solve these economic puzzles: What does the Federal Reserve bank do? Why do nations use money?,. | Chapter 24 Money and the Federal Reserve System Key Concepts Summary Practice Quiz Internet Exercises ©2000 South-Western College Publishing * In this chapter, you will learn to solve these economic puzzles: Why do nations use money? Is “plastic money” really money? What does the Federal Reserve bank do? * What is Barter? The direct exchange of one good for another good, rather than for money * What is the problem with Barter? It requires a coincidence of wants * What is Money? Anything that serves as a medium of exchange, unit of account, and store of value * What is the Advantage of Money? The use of money simplifies and therefore increases market transactions * What are the Functions of Money? Medium of exchange Unit of account Store of value * What is a Medium of Exchange? The primary function of money to be widely accepted in exchange for goods and services * What is a Unit of Account? The function of money to provide a common measurement of the relative value of goods and services * What does it mean that Money is Liquid? It is available to spend in exchange for goods and services without any additional expense * Are Credit Cards Money? No, credit cards fail to meet the store-of-value criterion and are therefore not money * What is the best level of Scarcity for Money ? The supply of money must be great enough to meet ordinary transactions needs, but not be so plentiful that it becomes worthless * What are other Properties of Money? Money must be portable divisible uniform acceptable * What is Commodity Money? Anything that serves as money while having market value in other uses * Is our Money backed up by Gold or Silver? No, our paper money was exchangeable for gold until 1934, and in 1963 Congress removed the right to exchange $1 bills for silver * What is Fiat Money? Money accepted by law and not because of redeemability or intrinsic value * What makes our Dollar Bills Fiat Money? All our . | Chapter 24 Money and the Federal Reserve System Key Concepts Summary Practice Quiz Internet Exercises ©2000 South-Western College Publishing * In this chapter, you will learn to solve these economic puzzles: Why do nations use money? Is “plastic money” really money? What does the Federal Reserve bank do? * What is Barter? The direct exchange of one good for another good, rather than for money * What is the problem with Barter? It requires a coincidence of wants * What is Money? Anything that serves as a medium of exchange, unit of account, and store of value * What is the Advantage of Money? The use of money simplifies and therefore increases market transactions * What are the Functions of Money? Medium of exchange Unit of account Store of value * What is a Medium of Exchange? The primary function of money to be widely accepted in exchange for goods and services * What is a Unit of Account? The function of money to provide a common measurement of the .