ECONOM 3229 Lecture Notes - Lecture 2: Commodity Money, Market Liquidity, Transaction Cost
6 Apr 2015
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Money is anything that"s accepted for payment for goods and debts. Societies without money and transaction cost: barter trade. Commodity money:something that has value itself without money(salts, spices, etc with special value) Fiat money: just paper, but it is money because government says so. M1: narrowest definition: includes currency at nonbank public, checking account deposits. M2: broader definition: includes m1 and saving deposits, small denomination (,000) time deposits, and money market mutual fund shares. Between 1999 and 2008 money supply grew by 7500% per year in zimbabwe. In 2008 inflation rate reached 15billion percent. Hyperinflation: inflation rate exceeding 50% per month.
