ECON BC 3033x Lecture Notes - Lecture 4: Commodity Money, Money Market, Financial Market
27 Sep 2016
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Document Summary
Flow of things like land, labor, capital (inputs) Money is used to measure things we place value on. Double coincidence of wants: situation where the supplier of good a wants good. B and the supplier of good b wants good a. Issues bc subjective value, time consuming, and hard. Need double coincidence of wants for these types of markets: Three aspects of money: store of value, ability to save money unlike a barter system, unit of account, measure gdp, cpi, etc, unit of deferred payment, way to pay people later, bond markets, interest rates, financial market. Dictates that this is money by the governing body. Saddam hussein issued dinar-- new currency but not backed by govt. Network effect individual agents began to accept, so more people began to. Forms of money accept it until fully recognized. Ease at which something can be turned into liquid cash. M2 m1 + savings deposit + certificate of deposits (cd) + mutual funds.
