ECON 1010 Lecture : Money, Price Level and Inflation
Document Summary
Lecture five: money, the price level, and inflation. Money is any commodity or token that is generally acceptable as a means of payment. A means of payment is a method of settling a debt. A medium of exchange is an object that is generally accepted in exchange for goods and services. In the absence of money, people would need to exchange goods and services directly, which is called bartering. This system prevailed during times when there was either a lack of physical money, or before the invention of the monetary system. Bartering is costly because it requires a double coincidence of wants, which is very rare. Double coincidence of wants occurs when two people are seeking the opposite good. For example, someone who has an ipod and is looking for a blackberry comes across a person with a blackberry looking for an ipod. A unit of account is an agreed measure for stating the prices of goods and services.
