ECON 211 Lecture Notes - Lecture 9: Token Money, Bank Reserves, Barter
Document Summary
Money is valuable when users accept it in buying and selling goods and services. Money is like a yardstick: it can be used to compare the worth of things that are bought and sold. Money is a way of storing wealth. Requires a double coincidence of wants: can be a problem in barter. A convenient social invention to facilitate exchanges of goods and services. Solves the problem of having a double coincidence of wants. Money payments --> business firms --> factor market (money income payments: rent, interest, wages and salaries, profits) --> households. Product market (goods and services) --> households --> productive resources (land, capital, labor, Add branches within districts to accommodate population growth. Independence of the members is very important to keep elections and politics from influencing monetary policy. Main function of fed is controlling money supply. Coin and paper money: this is token money so the intrinsic value of money is less than the face value.
