MGEC71H3 Chapter Notes - Chapter 3: Commodity Money, Payment System, Precious Metal

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEC71H3
• Professor: Jack Parkinson

Document Summary

Economists definition of money: anything that is generally accepted in payment for goods or services or in the repayment of debts. A certain amount at a given point of time. Wealth: the total collection of pieces of property that serve to store value. Income: a flow of earnings per unit of time. Medium of exchange used to pay for goods and services. Eli(cid:373)i(cid:374)ates (cid:271)a(cid:396)te(cid:396) e(cid:272)o(cid:374)o(cid:373)(cid:455)"s (cid:396)e(cid:395)ui(cid:396)e(cid:373)e(cid:374)t fo(cid:396) (cid:862)dou(cid:271)le (cid:272)oi(cid:374)(cid:272)ide(cid:374)(cid:272)e of (cid:449)a(cid:374)ts(cid:863) For a commodity to function effectively as money criteria: easily standardized, simple to ascertain its value, widely accepted, di(cid:448)isi(cid:271)le a(cid:374)d eas(cid:455) to (cid:862)(cid:373)ake (cid:272)ha(cid:374)ge(cid:863, easy to carry, must not deteriorate quickly i. e. wampum, tobacco, whiskey, cigarettes etc. Promotes productive efficiency: allowing specialization & the division of labor: time saved from producing a whole array of goods & services to trade under barter. As a means of payment provides liquidity which acts as a lubricant that allows the economy to run more smoothly.