Characteristics of Money
What are the 3 functions of money?
the medium of exchange, a measure of value, store of value
A savings account that guarantees a depositor a set interest rate over a specified interval of time
a certificate of deposit
Decisions to buy or sell U.S treasury bills or other investments (securities) the open market are called
Open Market Operations
this is inconvertible paper money made legal tender by a government decree
fiat money
Name one pro and one con of using a credit card
Pro is that you can spend money on expensive items and pay them off over time, a con is that it can lead to debt.
Say the Fed increased the reserve requirements from 2% to 7% , how would this impact the money supply and economic activity?
Money supply decreases and economic activity decreases
Name the 6 characteristics of money
acceptability, divisibility, portability, stability, durability, difficulty to counterfeit
What is the difference between a savings account and a money market account?
A savings account does not allow you to spontaneously withdraw money but a money market account allows you to withdraw money with limits.
What happens to the money supply and economic activity when the fed has less restrictive credit controls
Money supply and economic activity increases