Chapter

WHAT IS MONEY? 44

Preview 44

Meaning of Money 44

Functions of Money 45

Medium of Exchange 45

Unit of Account 46

Store of Value 47

Evolution of the Payments System 48

Commodity Money 48

Fiat Money 48

Checks 48

Box 1 Global: Birth of the Euro: Will It Benefit Europe? 49

Electronic Payment 50

Box 2 E-Finance: Why Are Scandinavians So Far Ahead of Americans in

Using Electronic Payments? 50

E-Money 51

Measuring Money 51

The Federal Reserve's Monetary Aggregates 51

Box 3 E-Finance: Are We Headed for a Cashless Society? 52

Following the Financial News The Monetary Aggregates 54

How Reliable Are the Money Data? 55

Summary, Key Terms, Questions and Problems, and Web Exercises 56

PART II Financial Markets 59

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