BANKING AFFAIRS

Detailed explanation-1: -If you are estimating your total expenses for school next semester, you are using money primarily as: a medium of exchange.

Detailed explanation-2: -When economists say that money serves as a unit of account, they mean that it is: a monetary unit for measuring and comparing the relative values of goods. When economists say that money serves as a store of value, they mean that it is: a way to keep wealth in a readily spendable form for future use.

Detailed explanation-3: -M2 consists of M1 plus (1) small-denomination time deposits (time deposits in amounts of less than $100, 000) less individual retirement account (IRA) and Keogh balances at depository institutions; and (2) balances in retail money market funds (MMFs) less IRA and Keogh balances at MMFs.

Detailed explanation-4: -Money is measured with several definitions: M1 includes currency and money in checking accounts (demand deposits). Traveler’s checks are also a component of M1, but are declining in use. M2 includes all of M1, plus savings deposits, time deposits like certificates of deposit, and money market funds.

Detailed explanation-5: -Representative Money Examples. The most familiar examples of representative money today are credit cards and checks.