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MGTA02H3 (136)

Chapter 8 what is money.docx

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Chapter 8 what is money 4102012 50000 PMThe characteristic of Money Money An object generally accepted by people as payment for goods and serviceso Portability modern currency light weight and easy to useo Divisibility Modern currency is easily divisible into smaller parts with fixed value for each unito Durability Modern currency does not spoil does not die if it wears out it can be replaced with new coins and paper moneyo Stability Value of paper money we use today has fluctuated over the years The Functions of Money Medium of exchangeStore of value Money can be used for future purchases thus it stores value Unit of account Money lets us measure the relative values of goods All Values can be valued and accounted for term of moneyCredit card Plastic moneyReferred as plastic money Not qualified as money but SUBSITIUDE OF MONEY Temporary medium of exchange but does NOT store valueBig business for 2 reasono Conveniento Extremely profitable for issuing companies Profit derives from 2 sources o Annual fee or interest on unpaid balanceso Merchants who accept credit cards pay fees to card issuers THE CANADAIAN FINANCIAL SYSTEM Financial institution Main function of financial institution is to ease the flow of money from sectors with surpluses to those with deficits Bank can issue financial claims against itself by making available funds for checking and saving accounts 4 distinct legal area o chartered bankso Alternate banks
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