Five Core Principles of Money and Banking
The first principle of money and banking.
What is Time has Value?
You pay for purchases with this asset.
What is money?
The most important factor in an economy that determines the amount of money.
What is inflation?
A web of arrangements that allow for the exchange of goods and services.
What is a payment system?
This asset is generally accepted as payment for goods and services or repayment of debt.
What is money?
This requires compensation and is the second principle of money and banking.
What is risk?
You transfer resources among parties as well as risk with this asset.
What is a financial instrument?
The two most important monetary aggregates.
What are M1 and M2?
Its value comes from government decree.
This is a flow of earnings over time.
What is income?
This is the basis for decision making.
What is information?
This allows you to buy and sell financial instruments quickly and efficiently.
What is a financial market?
This is the narrowest measure of money.
What is M1?
An instruction to a the bank to take funds from one account and transfer it to another.
What is a check?
This is the value of assets minus liabilities.
What is wealth?
This is how we determine prices and allocate resources.
What are markets?
These organizations provide a myriad of services such as access to financial markets, collection of information, borrowing.
What are financial institutions?
This monetary aggregate includes M1 and assets that cannot be directly used as means of payment.
What is M2?
An electronic version of a check.
What is a debit card?
Money must have three characteristics to be useful.
What are: (1) means of payment, (2) unit of account, and (3) store of value?
This enables the economy to grow faster and improves welfare.
What is stability?
What is the Federal Reserve System?
Bitcoin like other crypto currencies lack these three required features of fiat money.
What are: (1) means of payment, (2) unit of account, (3) store of value?
This payment system means "money" in Swahili.
What is M-Pesa?
This is the most important of the three characteristics of money.
What is "means of payment?"