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ECN 204 (282)

ECN 204 CH10.docx

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ECN 204
Christos Shiamptanis

Ch10 What Money is and Why Its ImportantWithout money trade would require barter exchange of one gs for anotherRequire a double coincidence of wantsunlikely occurrence that two people each have a good other wantsMost people would have to spend time searching for other to trade witha huge waste of resourcesSearching is unnecessary with money set of assets that people regularly use to buy gs from other people 3 Functions of MoneyMedium of exchange an item buyers give to sellers when they want to purchase gsUnit of account yardstick people use to post prices and record debtsStore of value item people use to transfer purchasing power from present to future 2 Kinds of MoneyCommodity money takes form of a commodity with intrinsic value Example gold coins cigarettes in POW campsFiat money money without intrinsic value used as money because of government decree Example Canadian dollar Money in Canadian EconomyMoney supply money stock quantity of money available in economyWhat should be moneyCurrency paper bills coins in the hands of general public
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