money and banking/types of Business

   The main difficulty of a barter system is finding

• a form of money that both parties will accept

• two people who have what each other wants

• a third party to evaluate the goods to be traded

•   trade goods that will retain their value over time

$100 pair of shoes is worth two $50 haircuts or four $25 tickets to a baseball game. This example represents money as

• a physical commodity

•    a standard of value

•   a medium of exchange

•    a store of value

A money that can be saved without losing its value over time acts as a

• a fiat money

• medium of exchange

•   store of value

•    standard of value

One of the economic properties of money is

• divisibility

• durability

•   scarcity

• uniformity

One of the physical properties of money is

• acceptability

•   portability

• scarcity

• stability of value

What type of money is issued by the United States government?

• commodity money

•   fiat money

• near money

•    representative money

The biggest problem associated with representative money is

• difficulty in transporting it

• fluctuations in the value of the backing commodity

• lack of agreement about exchange rate

• distrust of the issuing government

Demand deposits are

• checking accounts

•     savings accounts

•      certificates of deposit

•     money market accounts

     What are liquid assets?

• assets that are or that can easily become currency

• fluids, such as mercury, that were historically used as commodity money

• assets that flow from one type of bank account to another

• money that is counted in M2 but not in M1

What is included in M2 but not in M1?

• currency

• demand deposits

• other checking deposits

•   savings deposits