Economics 1022A/B Lecture Notes - Lecture 1: Opportunity Cost, Nominal Interest Rate, Online Banking
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ECON 1022A/B Full Course Notes
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Money is any commodity or token that is generally acceptable as the means of payment. A means of payment is a method of settling a debt. When payment has been made, there is no remaining obligation between the parties to a transaction. Money performs three other functions: medium of exchange, unit of account, store of value. A medium of exchange is any object that is generally acceptable in exchange for goods and services. Without money, it would be necessary to exchange goods and services directly for other goods and services an exchange called barter. A unit of account is an agreed measure for stating the prices of goods and services. In the absence of a standardized unit of account, keeping track of prices and comparing prices would be difficult. A store of value is any commodity or token that can be held and exchanged later for goods and services.