Work through the list without notes. If you cannot do a statement, follow its link, then come back. Guide = study guide; Practice = practice questions.
Understanding
- I can define money as any asset accepted as a means of payment, and explain why bonds, houses and credit cards are not money. (Guide: “What money is”; Practice Q7(c))
- I can explain how money solves the double coincidence of wants problem of barter. (Guide: “What money is”; Practice Q6(b))
- I can name the three functions of money and identify which one an everyday example shows. (Guide: “The three functions of money”; Practice Q1, Q6(a))
- I can explain why money is an imperfect store of value. (Guide: “The three functions of money”; Practice Q6(c))
- I can list what is in M1, what M2 adds, and what is in the monetary base. (Guide: “Measuring the money supply: M1 and M2”, “The monetary base”, Figure 1)
Calculation
- I can calculate M1 and M2 from a table, leaving out reserves, large time deposits, bonds and credit limits. (Guide: Worked example 1; Practice Q2, Q5)
- I can calculate the monetary base from currency in circulation and bank reserves. (Guide: Worked example 1; Practice Q5)
- I can find the value of near-money as M2 − M1. (Practice Q5(b))
Reasoning
- I can work out how a transfer between accounts changes M1, M2 and the monetary base. (Guide: Worked example 2; Practice Q3, Q7)
- I can explain why depositing or withdrawing cash leaves M2 and the monetary base unchanged. (Guide: Worked example 2; Practice Q7(a))
- I can tell which items are in the monetary base but not in M1. (Practice Q4)
All ticked? Move on to Topic 4.4, Banking and the Expansion of the Money Supply, or return to the course roadmap.