a) Identify and explain the three functions of Money. b) What comprises the M1 definition of...

a) Identify and explain the three functions of Money.

b) What comprises the M1 definition of money?

Expert Solution

Ans .

a)3 functions of money are -

Medium of exchange - money is used as a medium of exchange meaning that you can buy goods and services in exchnage of money.
Store of Value - money in nature can be saved , stored or retrieved any time and can be used as a medium of exchange at that time when it is being retreived , also there should be stability in the value of money overtime.
Unit of Value - It act as a measurement tool for judging the market value of good and services and all other transactions.

b) M1 - it is a narrow measure of supply of money which is made up of currencies which are physical and coins , checkable and demand deposits , NOW ( negotiable order of withdrawal ) accounts and travelers checks , it mainly holds all the money portion which have high liquidity in nature , thatswhy it mostly comprises of assets and currency which have high conversion with cash .

Note - Currency and coins in circulation are the biggest and largest components of M1.

-----------------------------------------------------------------------------------------------------------

Rahul Sunny answered 9 months ago

3) Explain the three ways money is used. What are the components of M1? M2? Explain...

3) Explain the three ways money is used. What are the components of M1? M2? Explain the two types of money and give examples. When did we leave the gold standard and why? 5) Define an equity security and a debt security. What makes them different? Give an example of each. How does trading occur in each of these markets? How can diversification reduce portfolio risk, explain what that would look like in holdings?

M1 refers to: a- the most narrowly defined money supply definition. b-currency held by the public...

M1 refers to: a- the most narrowly defined money supply definition. b-currency held by the public plus checking account balances. c-the smallest of the money-supply definitions. d-all of these Which one of the following in NOT considered part of M2? a-small time deposits of less than 100,000$ b-money market mutual fund shares c-large time deposits of more than 100,000$ d-savings deposits which one of the following is not part of the federal reserve system? a-council of economic advisors b-board of...

Define a money market. (b). State and explain four money market instruments. (c). Explain three functions...

Define a money market. (b). State and explain four money market instruments. (c). Explain three functions or uses of money markets. (d). What are the determinants of money market instruments.

How do economists define money? Explain. What are the three functions of money? Explain each. Explain...

How do economists define money? Explain. What are the three functions of money? Explain each. Explain the evolution of money from the 19th century to modern times. How can a rapid inflation degrade the ability of money to carry out its three functions? Explain.

MACROECONOMICS Multiple choice question regarding M1 definition of money--PLEASE EXPLAIN YOUR CHOICE. i. PART 1 What...

MACROECONOMICS Multiple choice question regarding M1 definition of money--PLEASE EXPLAIN YOUR CHOICE. i. PART 1 What is one of the basic reasons for focusing on the M1 definition of money? A) Only the components of M1 are regarded as liquid? B) Statistics Canada is able to gather data for the components of M1, but cannot do so for M2 and M3. C) Only the components of M1 can be used as a store of wealth. D) Its components all have...

A) What are three major functions of money? B) How does the FED increase the amount...

A) What are three major functions of money? B) How does the FED increase the amount of money in the banking system? C) What are the three main parts of the FED? What does each do? D) Explain the meaning of central bank independence

What are the three main functions of money? Explain each function using the example of how...

What are the three main functions of money? Explain each function using the example of how cigarettes performed each function in the prisoner of war camp article. Which function is the most important and why?

Describe the three functions of Money?

Money is defined by its functions, explain what money is. Explain what assets best serve the...

Money is defined by its functions, explain what money is. Explain what assets best serve the functions of money why money is measured as M1 and M2 (along a liquidity continuum). Finally explain what causes money, like the “dollar” to have value.

1. What is money and list the three functions of money? Which function is the most...

1. What is money and list the three functions of money? Which function is the most important? 2. Describe the organizational structure and functions of the Federal Reserve Syste 3. What is the difference between money market instruments and capital market instruments?

Question