Money, Banking and the central Banking system

5 important questions on Money, Banking and the central Banking system

What are the 3 main roles of money in a modern economy, or the three requirements to be called money?

  • Medium of exchange
  • a store of value
  • a unit of account 

What do we call it when money is the commonly accepted measure individuals use to set prices and make economics calculations

It is called the unit of account

What money aggregate or M1 is a major component of money supply?

Bank deposits

What are the three main tools that takes  care of the stability of Canada's financial systems

  • Depositor insurance,
  • capital requirements,
  • reserve requirements

Who decides how large the monetary base will be? What is that?

The central bank
an institution that oversees and regulates the banking system and controls the monetary base

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