Question 1

What is money?

Accepted Answer

Any asset that is accepted as a means of payment

Question 2

What is the money supply?

Accepted Answer

The total amount of money in circulation or in existence in a country

Question 3

What are monetary aggregates?

Accepted Answer

Different ways of grouping together various types of money

(M1 and M2)

Question 4

What are M1 and M2?

Accepted Answer

Monetary aggregates that economists use to measure the money supply

M1: Coins and currency in circulation, checking accounts deposits (narrow definition of money)

M2: Everything in M1 and also other types of deposits (savings deposits)

Question 5

What is the monetary base (M0/MB)?

Accepted Answer

The total amount of money created by the central bank

(currency in circulation and bank reserves)

4.3 Definition, Measurement, and Functions of Money, AP Macroeconomics Flashcards