Functions, properties and definitions of money.

Reading: AB, chapter 7, section 1.

Functions and properties of money

Medium of exchange
Unit of account
Store of value
Low return (interest rate)
Low risk
High liquidity

Definitions of monetary aggregates

Symbol	Assets Included	Billions of dollars (1993)
C	Currency	$299
M1	Currency, demand deposits, traveler's checks, checkable deposits.	$1,035
M2	Currency, M1, overnight repos, eurodollars, money market deposit accounts, money market mutual funds, saving and small time deposits.	$3,472

In this class, when we talk about the nominal money supply we will be referring to the monetary aggregate M1. Hereafter, the symbol "M" will denote M1.

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Last updated on July 15, 1996 by Eric Zivot.