Economics 1022A/B Lecture Notes - Economic Equilibrium, Nominal Interest Rate, Loanable Funds

• School: Western University
• Department: Economics
• Course: Economics 1022A/B
• Professor: Jeannie Gillmore

Document Summary

Money is defined as any commodity or token that is generally acceptable as a means of payment: means of payment refers to a method of settling a debt. Serves three main functions: medium of exchange it is generally accepted in exchange for goods and services. Allows for the overcoming of double coincidence of wants with the barter system. A credit card is a medium of exchange, but not money (it only creates more debt: unit of account. Agreed measure for stating the price of goods and services: store of value. Money can be held and exchanged later for goods and services. Money consists of: currency the notes and coins held by individuals and businesses are known as currency. Notes are money because the government declares them legal tender. Notes and coins inside banks are not counted as currency because they are not held by individuals: deposits at banks and other depository institutions (trust/mortgage companies, credit unions)