ECON 1115 Lecture Notes - Lecture 24: Franklin D. Roosevelt, Demand Deposit, Precious Metal

80 views4 pages
ECON 1115 – Lecture 24 – Money Concepts
Money is a medium of exchange in the sense that we all agree to accept it in making
transactions.
Merchants agree to accept money in exchange for their goods; employees agree to
accept money in exchange for their labour.
As a unit of accounting, money provides a simple device for identifying and
communicating value.
How much is that bicycle? It’s $200.
Without this convenient, readily understood unit of accounting, setting and
communicating value would be difficult.
Money serves as a store of value in that it allows us to store the rewards of our labour or
business in a convenient tool.
In other words, money lets us store the value of a long, hard week of work in a tidy
little stack of cash.
Without money, how would we set aside the compensation we receive for later use?
We could be paid in cows, but that would not be a very convenient way to set aside our
unspent compensation.
We could be paid in pizzas, but the value of our labour would not be stored in the rotting little
pies for very long.
In other words, economists largely define money by the functions that it serves.
It need not be green and made of paper, and it need not be little metallic discs—
money is anything that fills those three essential functions.
Now, the best money is also highly convenient—it is light, easy to carry, and can be
broken into smaller units for easy exchange.
(If we used cows for money, how would we give change?) But most important, it must
serve as a medium of exchange, a unit of accounting, and a store of value.
Types of Money:
An economist would tell you that what gives money its value depends on what type of money
it is: commodity money, representative money, or fiat money.
Commodity money has a value or use aside from its use as money.
Unlock document

This preview shows page 1 of the document.
Unlock all 4 pages and 3 million more documents.

Already have an account? Log in

Document Summary

Econ 1115 lecture 24 money concepts. Money serves as a store of value in that it allows us to store the rewards of our labour or business in a convenient tool. In other words, money lets us store the value of a long, hard week of work in a tidy little stack of cash. We could be paid in cows, but that would not be a very convenient way to set aside our unspent compensation. We could be paid in pizzas, but the value of our labour would not be stored in the rotting little pies for very long. In other words, economists largely define money by the functions that it serves. But most important, it must serve as a medium of exchange, a unit of accounting, and a store of value. An economist would tell you that what gives money its value depends on what type of money it is: commodity money, representative money, or fiat money.

Get access

Grade+20% OFF
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers