金融英语Lecture 1 Money.docx
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金融英语Lecture 1 Money.docx
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金融英语Lecture1Money
Money
Ifyoucanactuallycountyourmoney,thenyouarenotreallyarichman.
——AmericanoilbillionaireJ.PaulGetty
Whatismoney?
Economistsdefinemoneyasanythingthatisgenerallyacceptedinpaymentforgoodsorservicesorintherepaymentofdebts.
Typesofmoney
A.Commoditymoney
B.Convertiblepapermoney
C.Fiatmoney(orfiatcurrency):
Usuallypapermoney,isatypeofcurrencywhoseonlyvalueisthatagovernmentmadeafiatthatthemoneyisalegalmethodofexchange.
Unlikecommoditymoneyorrepresentativemoneyitisnotbasedinanothercommoditysuchasgoldorsilverandisnotcoveredbyaspecialreserve.
D.Privatedebtmoney
E.Electronicmoney
Privatedebtmoney
Aloanthattheborrowerpromisestorepayincurrencyondemand.E.g.IOUthecheckabledepositatcommercialbanksandotherfinancialinstitutions.
Commercialnotes(商业票据):
Short-term,unsecured,discounted,andnegotiablenotessoldbyonecompanytoanotherinordertosatisfyimmediatecashneeds.
Include:
promissorynote(期票,拮据)draft(汇票)checkandsoon.
Electronicmoney:
ElectronicCheck,InternetPaymentSystem,CreditCardService
Whatdoesmoneydo?
A.MediumofExchange
Inalmostallmarkettransactionsinoureconomy,moneyintheformofcurrencyorchecksisamediumofexchange;itisusedtopayforgoodsandservices.Theuseofmoneyasamediumofexchangepromoteseconomicefficiencybyeliminatingmuchofthetimespentinexchanginggoodsandservices.
Terms:
Transactioncost,Timevalueofmoney
B.UnitofAccount
Thesecondroleofmoneyistoprovideaunitofaccount;thatis,itisusedtomeasurevalueintheeconomy.Wemeasurethevalueofgoodsandservicesintermsofmoney,justaswemeasureweightintermsofpoundsordistanceintermsofmiles.
Note:
Fiatmoneyhasnotonlynoparticularvalueinuse;itdoesn'tevenreallyhaveavalueinexchangeexceptthatwhichisdecreedthatitwouldhave.
Terms:
Goodmoney,Badmoney
C.StoreofValue
Moneyalsofunctionsasastoreofvalue:
itisarepositoryofpurchasingpowerovertime.Itisanasset.It'ssomethingthatwecanusetostorevalueawaytoberetrievedatalaterpointintime.Sowecannotconsumetoday,wecanholdmoneyinstead-andtransferthatconsumptionpowertosomepointinthefuture.
Term:
Hardcurrency
MeasuringMonetaryAggregates
1.Measureas“money”onlythoseassetsthataremostliquid,hencethatfunctionbestasamediumofexchange.
2.Includeallfinancialassetsinthemeasureofmoney,butweighttheminproportiontotheirliquidity.
1.M1=MostNarrowMeasure(MostLiquid)
M1=currency+traveler’schecks+demanddeposits+othercheckabledeposits
2.M2=M1+LessLiquidAssets
M2=M1+smalldenominationtimedeposits+savingsdeposits+moneymarketdepositaccounts+moneymarketmutualfundshares
3.M3=M2+LessLiquidAssets
Moneysupply
Therevenueraisedthroughtheprintingofmoney.Whenthegovernmentprintsmoneytofinanceexpenditure,itincreasesthemoneysupply.Theincreaseinthemoneysupply,inturn,causesinflation.Printingmoneytoraiserevenueislikeimposinganinflationtax.
Toexpandthemoneysupply:
TheFederalReservebuysTreasuryBondsandpaysforthemwithnewmoney.
Toreducethemoneysupply:
TheFederalReservesellsTreasuryBondsandreceivestheexistingdollarsandthendestroysthem.
Inflation
Inflationisanincreaseintheaveragelevelofprices,andapriceistherateatwhichmoneyisexchangedforagoodorservice.
Hereisagreatillustrationofthepowerofinflation:
In1970,theNewYorkTimescost15cents,themedianpriceofasingle-familyhomewas$23,400,andtheaveragewageinmanufacturingwas$3.36perhour.In2008,theTimescost$1.50,thepriceofahomewas$183,300,andtheaveragewagewas$19.85perhour.
Hyperinflationisdefinedasinflationthatexceeds50percentpermonth,whichisjustover1percentaday.
Questions
1.Moneyisnotuniqueasastoreofvalue;anyasset,beitmoney,stocks,bonds,land,houses,art,orjewelry,canbeusedtostorewealth.Manysuchassetshaveadvantagesovermoneyasastoreofvalue:
Theyoftenpaytheownerahigherinterestratethanmoney,experiencepriceappreciation,anddeliverservicessuchasprovidingaroofoverone'shead.Iftheseassetsareamoredesirablestoreofvaluethanmoney,whydopeopleholdmoneyatall?
Theanswertothisquestionrelatestotheimportanteconomicconceptofliquidity.
2.Rankthefollowingassetsfrommostliquidtoleastliquid:
a.Checkingaccountdepositsb.Housesc.Currency
d.Washingmachinese.Savingsdepositsf.Commonstock
3.Whyhavesomeeconomistsdescribedmoneyduringahyperinflationasa“hotpotato”thatisquicklypassedfromonepersontoanother?
4.WasmoneyabetterstoreofvalueintheUnitedStatesinthe1950sthanitwasinthe1970s?
Whyorwhynot?
Inwhichperiodwouldyouhavebeenmorewillingtoholdmoney?
5.InBrazil,acountrythatwasundergoingarapidinflationbefore1994,manytransactionswereconductedindollarsratherthaninReals,thedomesticcurrency.Why?
Quiz
1.Fiatmoneyis:
A.creditcardchargesB.Coins
C.notconvertibleintopreciousmetals.D.checks
Answer:
C
2.Whichoftheseisnotafunctionofmoneyinaneconomy?
A.StoreofvalueB.Mediumofexchange
C.SourceofincomeD.Unitofaccount
Answer:
C
3.WhichofthefollowingisnotpartofM1?
A.checkingaccountsB.traveler'schecks
C.savingsaccountsD.currency
Answer:
C
4.IfMarydeposits$100ofhercurrencyinhercheckingaccount,then:
A.M1willincreaseby$100.B.M2willfallby$100.
C.M1andM2willnotchange.D.M2willincreaseby$100.
Answer:
C
5.IfMarymoves$100fromhersavingsaccounttohercheckingaccount,then:
A.M1willnotchange.B.M2willnotchange.
C.M1willfallby$100.D.M2willfallby$100.
Answer:
B
6.WhichofthefollowingisnotpartofM2?
A.SmalltimedepositsB.Currency
C.InstitutionalmoneymarketmutualfundsD.Savingaccounts
Answer:
C
7.Inefficienciesthatarecreatedwhenusingchecksasmoneyinclude:
A.Checkscantransferfundsslowly.
B.Therearetoomanybadcheckswritten.
C.Checkbookscanbestolen.
D.Checkscanbewrittenforanyamount.
Answer:
A
8.Theliquidityofanassetis:
A.theabilityofanassettoearninterestincome.
B.theamountofanassetsoldatdiscountorpremium.
C.therelativeeasewithwhichanassetcanbeconvertedintoamediumofexchange.
D.therelativeeasewithwhichanassetcanbeconvertedintoacommonstock.
Answer:
C
9.Foracommoditytofunctioneffectivelyasmoney,itmust
A.Bewidelyaccepted.B.Bebackedbygoldorsilver.
C.Beindestructible.D.Beprintedbythegovernment.
Answer:
A
10.Moneysupplydataisgeneratedby:
A.TheDepartmentofCommerce
B.TheFederalDepositInsuranceCorporation(FDIC)
C.TheFederalReserveSystem(theFed)
D.TheTreasuryDepartment
Answer:
C
11.Whichofthefollowingcorrectlyshowstheevolutionofthepaymentssystem?
A.Commoditymoney,fiatmoney,checks,electronicmoney.
B.Commoditymoney,fiatmoney,electronicmoney,checks.
C.Commoditymoney,checks,fiatmoney,electronicmoney.
D.Fiatmoney,commoditymoney,checks,electronicmoney.
Answer:
A
12.Whichofthefollowingistrueregardingmoney'sstoreofvaluefunction?
A.moneydoesnotallowapersontoholdpurchasingpowerfromthetimeincomeisearneduntilitisspent.
B.moneyistheonlystoreofvalueavailable.
C.moneyisthemostliquidstoreofvalueavailable.
D.moneyissuperiortoallotherstoresofvalueduringperiodsofinflation.
Answer:
C
13.Whichofthefollowingisnotadisadvantageofelectronicmoney?
A.Peopleareconcernedabouttheprivacyandsecurityofe-moneytransactions.
B.E-moneytransactionscostmorethanpaperchecktransactions.
C.Thecostofsettingupasystemforprocessinge-moneypaymentsishigh.
D.E-moneydoesnotallowpeopletotakeadvantageoffloat.
Answer:
B
14.Wealthis
A.Generallyacceptedfortherepaymentofdebts
B.Aflowofearningsperunitoftime
C.Astockconcept
D.Thetotalcollectionofpiecesofpropertythatservetostorevalue
Answer:
D
15.TheFed'smeasurementsofmonetaryaggregates
A.Aremorereliableintheshortrunthanthelongrun.
B.Arerevisedonceayear.
C.Doesnotdependonthedefinitionofmoney.
D.Aremorereliableinthelongrunthantheshortrun.
Answer:
D
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