ECON 203 Lecture Notes - Lecture 8: Commodity Money, Mortgage Loan, Life Insurance

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ECON 203 Full Course Notes
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Unit of account: way of measuring value in the economy in term sof money. Store of value: any asset such as shares, bonds. : liquid asset medium of exchange, if you sell bonds you have to pay commission and other fees. At any given time -> by providing medium of exchange, unit of account. Over time -> by providing store of value, standard of deferred payment. Commodity money: gold, value dependent on purity, intrinsic value, someone could cheat, difficult to control because unpredictable discoveries of new gold fields. Fiat money: inefficient to transport gold, so banks/gov"t began to store gold and issue paper certificates that could be redeemed for gold, worthless without guarantee from gov"t. The money supply consist of both currency and chequing and non-chequing account deposits. Banks play an important role in the way the money supply increases and decreases. Reserves: deposits that a bank keeps as cash in its vault or on deposit with the bank of.

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