TEST: Money, Banking & The Financial System

Front

Criteria to classify an item as money.

Back

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

Front

Money that has intrinsic value is called

Back

commodity money.

Front

What makes currency better than the barter system?

Back

eliminates the need for a double coincidence of wants.

Front

Why would salt not work well as money today?

Back

It is not scarce.

Front

The M1, M2, and M3 money supplies classify money into categories based on

Back

liquidity.

Front

Assets that have liquidity are

Back

easy to turn into cash.

Front

A financial system brings together

Back

savers and borrowers

Front

What is the most basic service a bank provides?

Back

A safe way to store and save money.

Front

The purpose of a financial intermediary is to help channel funds

Back

from savers to borrowers.

Front

What does the M2 money supply contain?

Back

savings deposits, time deposits, money market funds, and all M1 components.