8 good questions and answers about "the meaning of money - what is money"

What is an asset called when it can be easily converted to cash?
Liquid assets
Is your abnk account money even if it is not converted to cash? For what 2 reason is this true?
currency in circulation and chequable deposits  is considered money
What do we call bank accounts on which people can write cheques?
Chequable deposits or demand deposit
What is the total value of financial assets in  the economy that is considered money? Formula?
Money supply
MS =demand deposit+ currency in circulation
How do we describe the narrow definition of money?
This is the most liquid assets, like the demand deposit and the currency in circulation
Why is money crucial in in generating gain from trade?
Makes indirect exchange possible.
What do we call the problem in a barter system when two parties can trade only when each wants what the other has to offer?
Double coincidence of wants
What is the solution for the double coincidence of wants? What does it mean?
  • Money
  • because individuals can trade what they have to offer for money and trade money for what they want
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