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ECON 1B03 (523)
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Oct 29 note - Is my MasterCard an asset.docx

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Department
Economics
Course
ECON 1B03
Professor
Hannah Holmes
Semester
Fall

Description
Is my MasterCard an asset? (Ch 10) 29/10/2008 NO my MasterCard is not a asset Money – an asset regularly used to buy goods and services Money has 3 functions 1) Medium of exchange (you have not pay anything yet, credit card is a deferring payment) 2) Unit of account ($) 3) Store of value (asset) Liquidity – the ease with which an asset can be converted into the economy’s medium of exchange When prices rise, the value of money falls In other words, purchasing power of $ falls Rank the following assets from most liquid to least liquid: 1) Ahouse (2) 2) $5000 certificate of deposit (1) 3) APicasso painting (3) Commodity vs fiat money Commodity – raw materials Commodity money – money that takes the form of commodity
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