Note: This is post #117 in a weekly video series on basic economics.
What exactly is money? That may seem like a really simple question, but it’s actually kind of complicated, notes economist Alex Tabarrok. We often think of money as currency (i.e., paper bills and coins), but “money” is anything that is a widely accepted means of payment.
Given that there’s no set definition for what makes a commodity money, there are a few measurements for the U.S. money supplies. In this video by Marginal Revolution University, Tabarrok explains the MB (or “monetary base”) and how it measures currency and reserve deposits.
(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)
Click here to see other videos in the Introduction to Economics series.