ECON 1BB3 Chapter Notes - Chapter 12: Corn Chip, Linguine, Commodity Money

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rosescorpion545

15 Nov 2016

School

McMaster University

Department

Economics

Course

ECON 1BB3

Professor

Bridget O' Shaughnessy

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ECON 1BB3 Full Course Notes

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1bb3 : chapter 12 : money and the financial system. Barter - exchange of products directly for other products. Double coincidence of wants - trader willingly exchange his product for something anothother trader has to offer. As specialization increased, finding a particular good becomes difficult. High transaction costs of barter resulted in the creation of money. Money - good that is generally accepted in return for all other goods. Money is a medium of exchange, a common unit of account, and a store of value. Medium of exchange - a generally accepted commodity that is accepted as exchange for whatever is sold. Commodity money - an item that serves as money as as an item that can be bought or sold, money that has intrinsic value. Is a good, not a service ( services are intangible and cannot be held to be exchanged later ) Unit of account - standard on which value of goods and services are based.

Related Questions

1. To say money is socially defined means that:

A) the money supply includes all public and private securities purchased by society.

B) whatever performs the functions of money extremely well is considered to be money.

C) society, acting through Congress, specifies what shall be included in the money supply.

D) money has been defined in a Constitutional amendment.

2. Money functions as:

A) a medium of exchange.

B) a store of value.

C) a unit of account.

D) all of these.

3. If you are estimating your total expenses for school next semester, you are using money primarily as:

A) a store of value.

B) an economic investment.

C) a unit of account.

D) a medium of exchange.

4. If you place a part of your summer earnings in a savings account, you are using money primarily as a:

A) medium of exchange.

B) store of value.

C) standard of value.

D) unit of account.

5. If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as:

A) a store of value.

B) a medium of exchange.

C) a unit of account.

D) an economic investment.

6. A $70 price tag on a sweater in a department store window is an example of money functioning as a:

A) standard of deferred payments.

B) medium of exchange.

C) unit of account.

D) store of value.

7. Stock market price quotations best exemplify money serving as a:

A) index of satisfaction.

B) store of value.

C) medium of exchange.

D) unit of account.

8. Purchasing common stock by writing a check best exemplifies money serving as a:

A) medium of exchange.

B) unit of account.

C) index of satisfaction.

D) store of value.

crimsonalligator541

A property right is

		A social arrangement that governs the ownership, use, and disposal of anything that people value.
		An economical unit that hires production factors and organizes those factors to produce and sell goods and services.
		Any arrangement that enables buyers and sellers to get information and to do business with each other.
		Any commodity or token that is generally accepted as a means of payment.
		A medium of exchange.

cyantermite905

Money is often used to purchase items in society, but bartering was common in the past. Bartering is the trading of one good or service for another good or service.

Explain your experiences with bartering. List at least 1 advantage and 1 disadvantage to bartering.

Most developed countries in the world use flat money. This means that their money is not backed by gold or silver. The value is related to only the faith in the country that backs it. The US has used flat money since the 1970s.

Why do you think most developed countries use flat money? Would it be practical to switch back to a commodity (like gold or silver) backed money system? Why or why not?

Use at least two of the following terms in your answer: Asset

Flat Money

Store of value

Unit of account

Medium of exchange

lavenderkoala678

ECON 1BB3 Chapter Notes - Chapter 12: Corn Chip, Linguine, Commodity Money

ECON 1BB3 Full Course Notes

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