Exam 3 Econ 203 exam review 2024
1. What are the 3 roles of money?: 1. medium of exchange
2. store of value
3. unit of account
2. unit of account: a means for comparing the values of goods and services; we use money to value an asset or an economic activity
Ex: if your car is worth $5000, we u...
1. What are the 3 roles of money?: 1. medium of exchange
2. store of value
3. unit of account
2. unit of account: a means for comparing the values of goods and services; we use money to value
an asset or an economic activity
Ex: if your car is worth $5000, we use USD as a unit of account
-determine relative prices of things by comparing their values in dollars
3. medium of exchange: an item that buyers give to sellers when they want to purchase goods and
services; other people must accept the money as means of payment, in anticipation of others
accepting the money from them
-eliminates "double coincidence of wants" from bartering
-market transactions are accomplished by using cash
4. store of value: something that keeps its value if it is stored rather than used; money must be
keep some of its value.
Ex: 7% inflation means that the the value of a dollar will keep 93% of its value; anything that
does not degrade much over time
-You are saving money today for a future (emergency) purchase
5. What is a double coincidence of wants?: where both parties must have some- thing the other party
wants in order to trade.
6. Commodity money is:: intrinsic value outside of being used for exchange. Ex: gold is a
precious metal
7. Fiat money is:: no intrinsic value and is money by government decree. Ex: USD is fiat,
as nearly all monies in the world
8. What type of money do we have?: fiat money
9. What does the M2 level of money include?: Includes M1 money level (cash and checkable
receipts) and also saving accounts and money market accounts
10.What roles does the Federal Reserve serve?: 1)regulate and monitor the private banking
system
2)manage money supply to promote effectively the goals of maximum employment, stable prices, and
moderate long-term interest rates
11.How many regional branches does the Federal Reserve have?: 12
12.How many sit on the Board of Governors (Directors)?: 7
-are appointed by the president and confirmed by the Senate for 14-year terms
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, Exam 3 Econ 203 exam review 2024
13.Who is the Chairman of the Fed currently?: Jay Powell
14.How is the Chairman of the Board of Governors (directors) at the Federal Reserve selected
and how many years are in his/her term?: Appointed by the president and confirmed by the senate
for 4 year terms
15.Who makes up the FOMC?: compromised of 7 board directors, the NY regional federal
president, and rotating 4 regional Federal presidents.
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