Money

Overview


Money is unit the exchange in an economy, that is, the price of good or service is denominated in terms of a given currency.
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Properties of Money


In order to operate as an effective currency, the best forms of money possess the following characteristics.

  • Store of Value
  • Means of Exchange
  • Unit of Account

Measures of Money


Economists measure the total money supply in different ways.

  • C - currency
  • M1 - currency, demand deposits, travelers checks, other checkable deposits
  • M2 - M1, retail money market mutual funds, savings deposits, small time deposits