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ECN 204 (348)
Eric Kam (31)

Chapter 10.docx

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ECN 204
Eric Kam

Chapter 10 The Monetary SystemWithout money trade would require barter exchange of one gs for anotherTransactions would require a double coincidence of wantsthe unlikely occurrence that two people each have a good the other wantsPeople would have to spend time searching for trade partnershuge waste of resourcesSearching unnecessary with moneyThe 3 Functions of Money Medium of exchange item buyers give to sellers when the want to purchase gs Unit of account the yardstick people use to post prices and record debts Store of value people can use to transfer purchasing power from the present to the futureTwo kinds of Money Commodity money takes form of a commodity with intrinsic value gold coins cigarettes in POW camps Fiat money money without intrinsic value used as money because of govt decree Canadian dollarMoney in the Canadian Economy Money supply quantity of money a
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