Unit IV - Money

• Uses of Money
• Medium of Exchange: barter and trade
• Unit of Account
• Establishes economic value
• Store of Value: Money holds its value over a period of time
• Types of Money
•  Commodity money: gets value from type of material from which it is made
• Gold and Silver Coin
• Representative money: paper money backed by something tangible, giving it value
• Fiat money: money because the government says so.

• Characteristics of money
• Divisible
• Can be broken down
• Portable
• Uniform
• Scarce
• Durable

• Money Supply
• M1 Money - 75% of all money and most liquid (easy to convert)
• Currency (cash and coins) 
• Checkable Deposists (Demand deposits) - not as liquid as TC
• Travelers Check - worth 20$ - very liquid
•  M2 Money - not as liquid as M1 Money
• M1 money
• Savings Account
• Deposits held by banks outside of US
• M3 Money
• M2 money
• Certificate of Deposits (CD's)