Question

QUESTION 1 2 points Save Answer You are planning on having a garage sale, so you put price tags on all your used goods that you want to get rid of. You are using money as a O a unit of account O a medium of exchange O a store of value QUESTION 2 2 points Save Answer Amanda routinely uses currency to purchase her groceries. She is using money as a O a unit of account O a medium of exchange O a store of value QUESTION 3 2 points Save Answer Mia puts money into a piggy bank so she can spend it later. She is using money as O a unit of account O a medium of exchange O a store of value QUESTION 4 2 points Save Answer The following is hypothetical financial information about the US economy. Items Traveler's checks held by the public: Amounts owed on credit cards: Savings deposits: Credit limits on credit cards: Bills and coins in circulation: Checking account deposits: Small time deposits Mutual funds held by public: Amount $38 billion $279 billion $400 billion $514 billion $615 billion $905 billion $2,321 billion $2,956 billion M1 is $1,558 billion and M2 is $7,235 billion. M1 is $1,558 billion and M2 is $7,514 billion. O M1 is $1,958 billion and M2 is $7,235 billion. O M1 is $1,958 billion and M2 is $7,514 billion.

Answer 1

1) a) a unit of account
(this is one of the function of money through which we assign prices to all kinds of goods and services for the ease of transaction)

2) b) a medium of exchange
(this is one of the function of money through which it is accepted and recognized to facilitate transactions for the goods and services)

3) c) a store of value
(this is one of the function of money through which we save the money for future transactions or trade purposes as its usefulness in the medium of exchange)

4) credit cards are not included in M1, M2 or M3as they are not considered to be part of the money supply
so, M1 = bills and coins in circulation + Checking account deposits + Traveler’s checks
            = 615+905+38 = $ 1558 billion
similarly M2 = M1+savings deposits + mutual funds held by the public + small time deposits
                        = 1558+400+2956+2321 =$ 7235 billion

Hence, the required M1 is $ 1558 billion and M2 is $ 7235 billion