Chapter 10 Money - KEY

1. Write the essential question for Chapter 10: How has money and banking evolved in the United States? 2. The standard we are covering is SSEMI1. 3. Currency is coins & paper bills used as mone 4. Money is anything that serves as a medium of exchange, a unit of account,
& a store of value.

5. A medium of exchange is anything used to determine value during the

exchange of goods & services.

6. A unit of account is a means for comparing the values of goods & services. 7. A store of value is something that keeps its value if it is stored rather than used. 8. M1 is money that people can gain access to easily pay for goods & services. 9. M2 includes M1, plus most other accounts and assets that cannot be used as
cash but can be easily converted to cash.

10. Commodity money is objects that have value in themselves & that are also
used as money.

11. Representative money is objects that have value because the holder can
exchange them for something else of value

12. Fiat money is money that has value because the government has ordered
that it is an acceptable means to pay debts.

6 CHARACTERISTICS OF MONEY
1. DURABILITY - IT DOES NOT WEAR OUT QUICKLY 2. PORTABILITY - IT IS EASILY CARRIED 3. DIVISIBILITY - IT IS EASILY DIVIDED INTO SMALLER DENOMINATIONS 4. UNIFORMITY - ANY TWO UNITS OF MONEY ARE THE SAME IN TERMS OF WHAT THEY WILL BUY 5. LIMITED SUPPLY - THERE IS A LIMIT TO THE SUPPLY KEPT IN CIRCULATION 6. ACCEPTABILITY - EVERYONE CAN EXCHANGE IT FOR GOODS & SERVICES