EC250 Chapter Notes - Chapter 3: Representative Money, Real Wages, Exchange Rate
Document Summary
Barter is manageable when only a few goods are traded. Money is any asset that is used to intermediate exchange. Durability, value that is easy to assess, divisibility, the asset should also be relatively valuable. For an asset to become money it must have universal acceptance. Commodity money was used in the past: goods that have value beyond their use as money. Intrinsically useful: precious metals, representative money: certificates of deposits that represented claims on the underlying precious metals. Fiat money is mostly paper money and has no other use. Intrinsically useless: accepted because of the expectation that it can be used to acquire other goods and services. Bitcoins cannot replace cash because they cannot replace all roles of money. The amount of money in the economy is monitored by the bank of canada. Page 8 for definitions of m1, etc. Credit cards are not included in monetary aggregates.
