Money, Banking, Financial System(Complete solutions)

money correct answers anything that serves as a medium of exchange allows for: - specialization and division of labor -the development of a financial system to channel savings to investment - increases economic efficiency, output, income and wealth medium of exchange correct answers anything that is widely accepted as a means of payment barter correct answers when goods are exchanged directly for other goods unit of account correct answers a consistent means of measuring value of things When a person makes price comparisons among products store of value correct answers an item that holds value over time commodity money correct answers $ that has value apart from its use as money (ex. gold/silver) fiat money correct answers money that some authority, generally a gov, has ordered to be accepted as a medium of exchange currency correct answers paper $and coins checkable deposits correct answers balances in checking accounts check correct answers a written order to a bank to transfer ownership of a checkable deposit money supply correct answers total Q of money in the economy at any one time liquidity correct answers the ease with which an asset can converted into currency M1 correct answers narrowest of Fed's MS definitions that includes currency in circulation, checkable deposits & traveler's checks -perfetly liquid M2 correct answers broader measure of MS than M1 that includes M1 and other deposits financial intermediary correct answers an institution that amasses funds from one group and makes them available to another ex pension, insurance