ECON 3440 Lecture Notes - Lecture 8: Nominal Interest Rate, Mutual Fund, Irving Fisher
Document Summary
Tobacco and whisky used by early american colonists. Big stone wheels used by residents on the island of yap. Cigarettes used by prisoners of war in a pow camp during world war ii. Without money, people would barter, which requires a double coincidence of wants . Money promotes economic efficiency by minimizing transaction costs: unit of account. We measure the value of goods and services in terms of money as we measure weight in pounds and distance in miles: store of value. Money saves purchasing power from the time income is received until it is spent. Money as a medium of exchange makes money the most liquid of all assets: it does not have to be converted into a medium of exchange to immediately make purchases. The federal reserve system and the control of the money supply. The money supply is the amount of money in the economy.
