Chapter 1 Money

1. Chapter 1 Money

2. Requirement • 1.grasp • (1)function of money • (2)the measure of money aggregate • (3)evolution of the payment system • 2.key points • (5)the measure of money aggregate

3. 3.key terms • money • commodity money • fiat money • liquidity • M0 • M1 • M2 • M3 • M4

4. Think over • Which of the following belongs to money? • Stock, treasury notes ,treasury bills ,debit card ,alipay, banknotes, deposit in the bank.

5. Ⅰmeaning and measure of money • 1. MEANING • Money (money supply ) is anything that is generally accepted in payment for goods and services or in the payment of debts . • Currency = money ?

6. 2.Measure(m0—m4) • liquidity : ease and speed (P51) • M0=currency • M1=currency +checking account deposit+ travel checks • M2=M1+assets with check writing features and other assets with extremely liquidity (saving + small time deposit + short term money market assets)

7. M3=M2+less liquid assets (large time deposit+ term repurchase agreement＋term Eurocurrency + institutional money market mutual fund share) • M4= M3＋other short term liquid assets（treasury bills、commercial paper、bank accepted draft、short term corporate bonds 、certificate of life insurance）

9. Ⅱ Function of money • Case: • In the world war Ⅱ,cigarettes were used as money by prisoners of war in Nazi-era concentration camp. The red cross provided some relief to prisoners of war, but the relief was equal distributed and could not consider personal preference .

10. In order to facilitate exchange, cigarettes play the role of money, prisoners use cigarettes to mark price and exchange commodities. For example, a sausage worth of 10 cigarettes, a shirt worth of 80 ones, and washing one clothes should pay two cigarettes. Why can cigarettes be used as money by prisoners of war in Nazi-era concentration camp?

11. 1.medium of exchange • 2.unit of account • 3.store of value

12. Case study • Characteristics of money • The function of money ( store of value, unit of account and medium of exchange)

13. Ⅲ Evolution of The Payment System：The Method of Conducting Transactions in The Economy. • 1.commodity money • money made up of precious metal or other valuable commodity

14. Cowrie money

15. metallic money

16. 2.paper money • (1)convertible bank notes • (2)Fiat money • (3)check • (4)electronic means of payment (EMOP) • payment are made by electronic telecommunication.

17. convertible bank notes

18. Fiat money

19. check

20. 3.electronic money • (1)debit cards • (2)stored value card • (3)electronic cash • (4)electronic checks

21. Electronic money

22. Summary • 1.Money (money supply ) is anything that is generally accepted in payment for goods and services or in the payment of debts, which can be measured by M0, M1, M2, M3, M4 according to liquidity. • 2.the functions of money are: medium of exchange, unit of account, store of value. • 3.payment system evolves from commodity money , paper money to electronic money.

23. Key words and questions • 1.key words • money • commodity money • fiat money • liquidity • M0 • M1 • M2 • M3 • M4

24. 2.questions • (1)How to measure money supply? • (2)What are the functions of money? • (3)please analyze the evolution of payment system ?