Why do governments create fiat currencies? Do they help promote an optimal amount of money? Explain.

Define price. Explain the price system that exists under barter and why it is problematic. How does the emergence of a money commodity from barter improve the market system?

Why do economists study the money supply? (Discuss the four reasons covered in class.)

Define: C, M1, M2, M3, and L. How are they related in terms of aggregation and in terms of liquidity?

Define liquidity. Rank the following assets in terms of liquidity, from most to least liquid: money market mutual fund, demand deposit, corporate stock, dollar bill, house, gold, checkable deposit.

How is income related to saving and investment?