ECN 204 Lecture Notes - Fractional-Reserve Banking, Reserve Requirement, Demand Deposit
25 Apr 2012
School
Department
Course
Professor
Document Summary
If there were no money, people would have to depend on barter which is the exchange of one good/service for another good/service. It requires the double coincidence of wants, the unlikely occurrence that two people each have a good or service that the other wants. With money, trading is easier because it is a standard form. Money: the set of assets in an economy that people regularly use to buy goods and services from other people (money = wealth) Three functions of money: a medium of exchange: an item that buyers give to sellers when they wants to purchase goods or services, unit of account: the yardstick people use to post prices and record debts. When we want to measure and record economic value, we use money as the unit of account: store of value: an item that people can use to transfer purchasing power from the present to the future.
