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Economics (1,511)
EC223 (76)
Lecture

Chapter 3

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Department
Economics
Course
EC223
Professor
Angela Trimarchi
Semester
Fall

Description
Chapter 3: What is Money? Wealth not only includes money, but also stocks, bonds, land, furniture, cars, and houses. Income is a flow of earnings per unit of time. Money serves three primary functions: a) a medium of exchange b) a unit of account c) a store of value Medium of Exchange – money is used to pay for goods and services Unit of Account – measures value in the economy Store of Value – it is a repository of purchasing power over time How good a store of value money is depends on the price level, because its value is fixed in terms of the price level. A doubling of all prices means that the value of money has doubled. During a period of high inflation, when the price level is increasing rapidly, money loses value rapidly, and people will be r
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