ECON 102 Chapter Notes - Chapter 27: Precious Metal, Commercial Bank, Legal Tender

• School: UBC
• Department: Economics
• Course: ECON 102
• Professor: Robert Gateman

Document Summary

Medium of exchange: anything that is generally acceptable in return for goods/service sold: money acts as a store of value and as a unit of account. Barter: system in which goods/services are traded directly for others goods/services: there must be a double coincidence of wants in order to barter. This is unnecessary when a medium of exchange is used. Money is a convenient means of storing purchasing power: goods can be bought, and money will be stored until the good can be resold. When the price level is stable, the purchasing power of a given sum of money is also stable: when the price level is variable, the purchasing power of money is unstable. Money can be used purely for accounting purposes without having a physical existence: money may not need a physical existence if it is documented is some way. A bank deposit can serve as a unit of account and a medium for exchange.