ECO349H1 Lecture Notes - Lecture 3: Seigniorage, Commodity Money, Cash Flow
Document Summary
Money: anything generally accepted (widely accepted) in payment for goods, services, or repayment of debt. Income: flow of earnings per unit of time. Stock variables: a variable whose value is at a point in time. Ie. wealth (how much you are worth as of now), assets, liabilities, money (m), debt (how much you owe at this point in time) Flow variables: a variable whose value is over a period of time. Ie. income (y), gdp, factors of gdp (c, i, g, x, m), deficit/surplus (spend-take in over period), wage rate (w) Eliminates need for double coincidence of wants: you have good/service i want and i have good/service you want. Allows specialization and division of labour= economic efficiency. Effective if: easily standardized, widely accepted, divisible, easy to carry, doesn"t deteriorate quickly. Commodity money: money that has value itself but can also be used as moe (trade goods for goods) Ie. silver, gold, shovel used to plow field, animals.
