Money as an Accepted as a Medium of Exchange in Most Transactions - Coursework Example

In the third instance, money acts as a store of value. Money must hold its value for a given time to serve as a universal medium of exchange. A challenge to this functional aspect of money is that it depreciates with inflation. Its ready acceptance nature makes it the best form of value storage. M1 growth rate rose by 17 per cent from 2008 to 2009. The Federal Reserve policymakers interpret that with a drastic increase in value, the liquid assets. Over a one-year currency, paper money and coins at hand increased inflow.

Traveller’s checks that the banking institutions did not issue dominated inflow.M2 increased by 3 per cent from 2008 to 2009, a small rise compared to a rise in M1. The small rise shows a slight increase inflow of other assets that are not as liquid as M1 assets. Assets constituted by money deposit accounts and market mutual fund shares slightly increased, indicating a preference shift to the most liquid assets.