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study guide

2 Pages
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Department
Management (MGT)
Course Code
MGTA02H3
Professor
Chris Bovaird

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Chapter 8: Understanding Money and Banking
WHAT IS MONEY?
-the value of everyt hing you own is your personal wealth
-not all of it, is money
The Characteristics of Money
-over the centuries, items as diverse as stone wheels, salt, wool, and shells have been used as
money
-money: any object generally accepted by people as payment for goods and services
-any object can serve as money if it is por table, divisible, durable, and stable
Portability- lightweight and easy to handle
Divisibility- modern cur rency is easily divisible into smaller parts with fixed values for
each unit
Durability- modern cur rency does not spoil, die, or wear out, it can be replaced with new
coins and paper money
Stability- t he value of paper money we use today has f luctuated over the years, it is
considered stable
The Functions of Money
-a barter economy is an economy in which goods are exchanged directly for one another
-a money economy is an economy in which a seller would sell his good, receive money, and
exchange the money for another good
-the barter economy is quite inefficient, but it is still used in various places around the world such
as Russia
-money serves as three functions:
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Description
Chapter 8: Understanding Money and Banking WHAT IS MONEY? -the value of everything you own is your personal wealth -not all of it, is money The Characteristics of Money -over the centuries, items as diverse as stone wheels, salt, wool, and shells have been used as money -money: any object generally accepted by people as payment for goods and services -any object can serve as money if it is portable, divisible, durable, and stable Portability- lightweight and easy to handle Divisibility- modern currency is easily divisible into smaller parts with fixed values for each unit Durability- modern cu
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