RSM100Y1 Lecture : intro RSM part 1
Document Summary
Readings: 1-29, 36-49, 140-149, 274-279, 589-600, 603-605, 608-612. 3 functions of money: method of exchange, store of value, unit of account (common denominator) Gold worked best in early civilizations because: portable, divisible, durable, stable in quantity (relatively rare) otherwise useless (except art) use as money based on t rust others would accept. use of metals for money by standardizing purity and weight. monarchs debased coinage by melting down existing coins diluting with other metals reissue leaving extra for monarch but, often did prices rise in response (mv =pt) Money and prices (quantity theory: mv =pt. v frequency of money changing hands in a year. T real transactions" (e. g. number of bushels of wheat) gold from new world would temporarily finance more production, but p eventually rose. In middle ages, wealthy would give their gold to goldsmiths or money traders who had vaults to protect.
