4.3

Definition, Measurement, and Functions of Money

AP Macroeconomics

Functions of Money

Desirable Properties of Money

Types of Money

Measuring the Money Supply

M1 (Most Liquid)

M2 (M1 + Near Money)

Which Measure Matters?

What Is NOT Money

Liquidity

Why People Hold Money: Three Motives

The Opportunity Cost of Holding Money

Why Nominal and Not Real?

What Shifts Money Demand?

Connecting to the Money Market (4.5)

AP Exam Tips

Common Mistakes