Meaning and Function of Money

Chapter 3
What Is Money? onomist s Moaning of Monay
for ard
Aryhing thal is generally arepted in pament yrna

Not Ihe sane as wealth or ircome

Functions of Money
1 Medum of eychange
2 Unit of account
3 Store of value
Evolution of Payments Systemn
1.Precious metals lke gold and silver
2. Paper currency (hat mone
Money. Banking 3 Checks
FinancialMarkets 4 Elecirontc means of payment
5 Electronic money Debit cards, Slored-vahye cards, Smart cards E
cash

Bank of Canada's Growth Rates of the Bank's

Monetary Aggregates
Monetary Aggregates
 Money as a Weighted Aggregate

The Bank of Canada's money supply measures are

simple-sum' indices,
M= x t X2 t...tn

where x; is one of the n monetary components of the

monetary aggregate M

Weighted monetary aggregates (such as the °Divisia°')

seem to predict inflation and the business cycle
somewhat better than the Bank's aggregates
2005 Pearson Education Canada Inc.
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