BU204_03_Johnson_Jennifer_Unit_8_Homework prof corrections

BU204_03_Johnson_Jennifer_Unit_8_Homework prof corrections...

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Jennifer Johnson Kaplan University BU204- 03 Macroeconomics Anthony Brogna Unit 8 December 7, 2010
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Fiat money “is a medium of exchange whose value derives entirely from its official status as a means After reading, the information fiat money is currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith. –Excellent! M1 “is the most liquid, consisting of currency in circulation, checkable bank deposits, and To put in very simple M1 is paper money coins. After reading the information on M1 payments by check are normally recognized on the day of receipt of the check, but in reality the recipient does not have access to the amount received until the check clears, which may take a day or more. - Good M2 “consists of M1 plus various kinds of near-moneys: savings deposits, time deposits, and money market funds.” (Krugman & Wells, 2009, p. 387).
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I understand of M2 to contain all of M1 plus and various forms of small time deposits. These deposits include savings accounts and certificates of deposits. Withdrawal or redemption of these deposits often leads to some penalty in lost interest. – Good - Focus on the store of value function of money FED “is a central bank —an institution that oversees and regulates the banking system, and
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BU204_03_Johnson_Jennifer_Unit_8_Homework prof corrections...

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