ECON 2000 Chapter Notes - Chapter 4: Economic Equilibrium, Fisher Equation, Opportunity Cost

14 views7 pages

mag0sea

23 Feb 2017

School

Department

Course

Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Roughl(cid:455) speaki(cid:374)g, the dollars/(cid:272)urre(cid:374)(cid:272)(cid:455) held (cid:271)(cid:455) the pu(cid:271)li(cid:272) (cid:373)ake up the (cid:374)atio(cid:374)"s money supply. Store of value (a way to transfer purchasing power from the present to the future) Medium of exchange (what we use to buy goods and services) Money is an imperfect store of value because of inflation. The ease with which an asset can be converted to a medium of exchange is called liquidity. Barter economy- an economy in which trades require a double coincidence of wants. Fiat money money that has no intrinsic value (market value); established by the government (what we use today) Commodity money a commodity with some intrinsic value (what we used in the past as a substitution for money. When people use gold as money the economy is said to be on a gold standard. The evolution of commodity money to fiat money was because of government influence. Money supply the quantity of money in the economy.

Related Questions

Money is often used to purchase items in society, but bartering was common in the past. Bartering is the trading of one good or service for another good or service.

Explain your experiences with bartering. List at least 1 advantage and 1 disadvantage to bartering.

Most developed countries in the world use flat money. This means that their money is not backed by gold or silver. The value is related to only the faith in the country that backs it. The US has used flat money since the 1970s.

Why do you think most developed countries use flat money? Would it be practical to switch back to a commodity (like gold or silver) backed money system? Why or why not?

Use at least two of the following terms in your answer: Asset

Flat Money

Store of value

Unit of account

Medium of exchange

lavenderkoala678

1. To say money is socially defined means that:

A) the money supply includes all public and private securities purchased by society.

B) whatever performs the functions of money extremely well is considered to be money.

C) society, acting through Congress, specifies what shall be included in the money supply.

D) money has been defined in a Constitutional amendment.

2. Money functions as:

A) a medium of exchange.

B) a store of value.

C) a unit of account.

D) all of these.

3. If you are estimating your total expenses for school next semester, you are using money primarily as:

A) a store of value.

B) an economic investment.

C) a unit of account.

D) a medium of exchange.

4. If you place a part of your summer earnings in a savings account, you are using money primarily as a:

A) medium of exchange.

B) store of value.

C) standard of value.

D) unit of account.

5. If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as:

A) a store of value.

B) a medium of exchange.

C) a unit of account.

D) an economic investment.

6. A $70 price tag on a sweater in a department store window is an example of money functioning as a:

A) standard of deferred payments.

B) medium of exchange.

C) unit of account.

D) store of value.

7. Stock market price quotations best exemplify money serving as a:

A) index of satisfaction.

B) store of value.

C) medium of exchange.

D) unit of account.

8. Purchasing common stock by writing a check best exemplifies money serving as a:

A) medium of exchange.

B) unit of account.

C) index of satisfaction.

D) store of value.

crimsonalligator541

A double coincidence of wants refers to:
a. the situation in which a good that is used as money also has value independent of its use as
money.
b. the fact that for a barter trade to take place between two people, each person must want what the
other one has.
c. the idea that a barter economy is more efficient than an economy that uses money.
d. the situation where two parties are involved in a transaction where money is the medium of
exchange.

yellowbee66

ECON 2000 Chapter Notes - Chapter 4: Economic Equilibrium, Fisher Equation, Opportunity Cost

Document Summary

Get access

Related Documents

ECON 2000 Lecture Notes - Nominal Interest Rate, Real Interest Rate, Fisher Equation

ECON 2000 Chapter Notes - Chapter 4: Term Auction Facility, Ex-Ante, Jato

ECON 2000 Chapter Notes - Chapter 4: Fiat Money, Commodity Money, Monetary Policy

Related Questions