1. Be familiar with all 3 Functions of Money-what they are, and how an item can meet those functions.
2. Be able to identify each component of the M-system of classification of the money supply. Be able to explain how this system is based on the system of liquidity. Make sure you can calculate each "M" and remember that this is a cumulative process.
3. Explain the meaning of each characteristic of money and be able to apply each characteristic to US or foreign currency in assessing how well a form of money "works" insofar as promoting economic activity.
4. Money Demand: Be familiar with each type of money demand. For each, be able to explain what types of transactions impact it, and be able to illustrate each on a money demand curve.
Types of money demand include:
a. transactions demand for money
b. asset demand for money
c. total demand for money
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