ECN 204 Lecture : Chapter 10.docx

• School: Ryerson University
• Department: Economics
• Course: ECN 204
• Professor: Eric Kam

Document Summary

Without money, trade would require barter, exchange of one g&s for another. Transactions would require a double coincidence of wants the unlikely occurrence that two people each have a good the other wants. People would have to spend time searching for trade partners huge waste of resources. Medium of exchange: item buyers give to sellers when the want to purchase g&s. Unit of account: the yardstick people use to post prices and record debts. Store of value: people can use to transfer purchasing power from the present to the future. Commodity money: takes form of a commodity with intrinsic value (gold coins, cigarettes in pow camps) Fiat money: money without intrinsic value, used as money because of govt decree (canadian dollar) Money supply: quantity of money available in the economy. Central bank: institution designed to regulate the money supply in the economy, bank of canada. Currency: paper bills and coins in the hands of the public.