Definition : money is the generally accepted medium of exchange

Problems of barter economy + how money solves it : double coincidence of wants needed
Money acts as a generally accepted medium of exchange -> act of buying and selling can be
separated .

Features of money : homogenous , easily divisible , generally accepted , durable , portable

Functions of money : unit of account : money is used to express price of current goods and
services
Standard of deferred payment : money is used to express the price of future payments
Medium of exchange : medium to facilitate the buying and selling of goods and services
Store of value : allows people to store up purchasing power for future payments

M1 : cash held by public and demand deposits in licensed banks

M2 : demand , savings and time deposits in licensed banks and negotiable certificate of
deposits issued by licensed banks + cash held by public
M3 : demand , savings and time deposits in licensed banks and negotiable certificate of
deposits issued by licensed banks + cash held by public + time deposits and NCDs issued
by restricted licence bank and deposit taking company

Licensed bank Restricted licence bank Deposit taking company

Type of deposit All Time deposit only Time deposit only
Amount Any $500000 $100000
Term Any Any Min 3 months