Mr. Maurer
AP Economics (Macro)
Chapter 13 – Money and Banking
Homework #1 – Wednesday, 2/18/15
Read pages 232 – 238 (end with Quick Review 13.2). While you read take notes. When you are done
taking notes, review your notes to make sure you have answered these questions. If not, write the
answers to any questions not covered in your notes.
1. What do each of the following mean in regards to money?
- medium of exchange
- unit of account
- store of value
2. Identify and define the components of “M1.”
3. Identify and define the components of “M2.” What makes these funds different from those included in
the M1 definition of money?
4. Identify and define the components of “M3.” Why are these not included in M1 or M2?
5. Read “Money as Debt” on p. 236 and pause. Think about it for a minute. If money is debt, what does it
mean if you have a $5 bill? What does it mean if you write someone a $50 check (assuming that you have
the funds in your checking account to cover it.)?
6. What 3 attributes of money give it its value? What is “fiat money?”
7. Why is it important that the value of a currency remain relatively stable?
Mr. Maurer
AP Economics (Macro)
Chapter 13 – Money and Banking
Homework #1 – Wednesday, 2/18/15
Read pages 232 – 238 (end with Quick Review 13.2). While you read take notes. When you are done
taking notes, review your notes to make sure you have answered these questions. If not, write the
answers to any questions not covered in your notes.
1. What do each of the following mean in regards to money?
- medium of exchange
- unit of account
- store of value
2. Identify and define the components of “M1.”
3. Identify and define the components of “M2.” What makes these funds different from those included in
the M1 definition of money?
4. Identify and define the components of “M3.” Why are these not included in M1 or M2?
5. Read “Money as Debt” on p. 236 and pause. Think about it for a minute. If money is debt, what does it
mean if you have a $5 bill? What does it mean if you write someone a $50 check (assuming that you have
the funds in your checking account to cover it.)?
6. What 3 attributes of money give it its value? What is “fiat money?”
7. Why is it important that the value of a currency remain relatively stable?