ECO 1302 Chapter Notes - Chapter 12: Credit Union, Chartalism, Fiat Money
6 Mar 2017
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Document Summary
Banks play a strategic role in the financing of aggregate spending and, therefore, in the determination of aggregate demand. Bank run: occurs when many depositors withdraw cash from their accounts all at once. Barter: a system of exchange in which people directly trade one good for another, without using money as an intermediate step. Another tale to the origin of money (cid:449)hat that to fa(cid:272)ilitate the task of dis(cid:272)ha(cid:396)gi(cid:374)g o(cid:374)e"s ta(cid:454) obligation, money was invented that could relieve the government of ordering individuals to directly pay taxes in king. For government infrastructure building, individuals will pay their taxes with state-issued money. State or chartalist concept of money: identifies money primarily as a unit of account created by the state to permit individuals to discharge their obligations to the state, which evolved also as a medium of exchange in market transactions. Unit of account: the standard unit for quoting prices.
