ECO100Y5 Chapter Notes - Chapter 27: Precious Metal, Fiat Money, Commercial Bank
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ECO100Y5 Full Course Notes
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What is money: money as a medium of exchange. Medium of exchange- anything that is generally accepted in return for g/s sold. Barter- a system in which g/s are traded directly for other g/s. The double coincidence of wants in unnecessary when a medium of exchanged is used. Characteristics of money: must be easily recognizable and readily acceptable, must have a high value relative to its weight, must be divisible, must be reasonably durable, must be difficult to counterfeit, money as a store of value. Money is a convenient means of storing purchasing power; goods may be sold today for money and the money may then be stored until it is needed for some future purchases. Money must have a relatively stable value; when price level is stable, the purchasing power of a given sum of money is also stable. Hyperinflation- very high inflation: money as unit of account.
