About This Chapter
Fundamentals of Money - Chapter Summary
Our instructors have developed fun lessons you can access any time to strengthen your grasp of the fundamentals of money. By studying this chapter, you can gain greater insight into topics like money as a store of value, how money is made and the multiplier effect. Use our self-assessment quizzes and practice exam to find out how much you understand about these topics. If you develop questions while reviewing the lessons, don't hesitate to submit them to our experts. Once you've completed this chapter, you will be ready to do the following:
- Explain the function of money as a medium of exchange
- Differentiate between money as a store of value and money as a standard of value
- Discuss how to measure the money supply
- Provide examples of bank assets and liability
- Describe how money is made through bank lending
- Discuss the concept of the multiplier effect
1. Money as a Medium of Exchange: Definition, Function & Examples
Money serves several different functions in a modern economy. In this lesson, you'll learn that money is a medium of exchange and discover how it works in our economy. You'll also have a chance to take a short quiz after the lesson.
2. Money as a Store of Value: Definition & Overview
Money presents many advantages for economic development. In this lesson, you'll learn about how money can store value, as well as learn of other commodities that act as stores of value as well.
3. Money as a Standard of Value: Definition & Overview
In this lesson, we will explore the concept of money acting as a standard of value so that individuals and businesses can make informed comparisons when making financial decisions.
4. Measuring the Money Supply: Explanation and Examples
The money supply is defined as all the money in circulation around the country at any given time. Explore an explanation and find examples of how the Federal Reserve measures the health of the nation's money supply.
5. Bank Assets & Liabilities: Definitions & Examples
In this lesson, you'll learn about the different types of bank assets and liabilities. We'll look at examples of bank assets and liabilities including a discussion of rate sensitive assets and liabilities.
6. How Money Is Made: Understanding Bank Lending in the Economy
Banks make money by charging interest on the money they lend to individuals and businesses and are required by the fractional reserve banking system to hold a certain amount of cash deposits in reserve. Learn how money is made by understanding how bank lending works and its impacts on the economy.
7. Money and Multiplier Effect: Formula and Reserve Ratio
Although banks make money by making loans to people and businesses, they are required to hold a portion of deposits in reserve. Explore how the multiplier effect formula and reserve ratio are calculated and how reserve limits impact the money supply and the economy.
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Other chapters within the UExcel Introduction to Macroeconomics: Study Guide & Test Prep course
- Fundamental Concepts of Macroeconomics
- Government Failure in Macroeconomics
- Demand, Supply & the Economic Market
- Role of Government in Macroeconomics
- National Income Accounting Overview
- Unemployment & the Economy
- Basic Concepts of Inflation
- Measurements of Inflation
- The Business Cycle & Economics
- Aggregate Demand in Economics
- Fiscal Policy in Economics
- Budgets & National Debt
- Understanding Monetary Policy
- Understanding the Federal Reserve System
- Supply-Side Policy & Policy Comparisons
- UExcel Introduction to Macroeconomics Flashcards