What are the three basic functions of money

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1. What are the three basic functions of money? Describe how rapid inflation can undermine money's ability to perform each of the three functions.

2. Which two of the following financial institutions offer check-able deposits included within the M1 money supply: mutual fund companies; insurance companies; commercial banks; securities firms; thrift institutions? Which of the following items is not included in either M1 or M2: currency held by the public; check-able deposits; money market mutual fund balances; small-denominated (less than $100,000) time deposits; currency held by banks; savings deposits?

3. What "backs" the money supply in the United States? What determines the value (domestic purchasing power) of money? How does the purchasing power of money relate to the price level? Who in the United States is responsible for maintaining money's purchasing power?

Reference no: EM132506538

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