Textbook Notes (362,734)
Canada (158,032)
York University (12,350)
Economics (958)
ECON 1010 (255)
Chapter 24

Econ 1010 - CHAPTER 24.docx

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York University
ECON 1010
George Georgopoulos

CHAPTER 24  Money o Three functions  Medium of exchange • • Barter: people would need to exchange goods and services directly in the absence of money o Requires a double coincidence of wants (rare, so barter is costly)  Unit of account • Is an agreed measure for stating the prices of goods and services •  Store of value • Money can be held for a time and later exchanged for goods and services • o Money in Canada consists of:  Currency • Notes and coins held by individuals and businesses  Deposits at banks and other depository institutions o Official Measures  M1 • Consists of currency held by individuals and businesses plus chequable deposits owned by individuals and businesses • All the items here are means of payment (they are money)  M2 • Consists of M1 plus all other deposits- non-chequable deposits and fixed term deposits • Some savings deposits here are not means of payments (called liquid assets) o Liquidity  Property of being instantly convertible into a means of payment with little loss of value o Deposits  Are money, but cheques are not • Acheque is an instruction to a bank to transfer money o Credit cards  Are not money
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