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Presentation on theme: "MONEY."— Presentation transcript:


2 What is money? Anything that people will accept as payment for goods & services

3 Types of Money Commodity Money
Derives its value from the type of material from which it is composed Best example in history are coins made from precious metals Problem w/commodity money  people hoard it if it becomes too valuable

4 Representative Money Paper money backed by something hard (gold/silver)

5 Fiat Money Nothing hard backing it, but declared by the gov’t & accepted by citizens to have worth Started in 1971 Gov’t must control its supply or maintain its scarcity for the dollar to be worth more Why is U.S. money considered “fiat money?” It’s only money because our gov’t says it is.

6 Functions of Money Medium of exchange Measure of value Store of value

7 Physical Characteristics of Money
Portable Money needs to be small, light & easy to carry Paper $ is easy to carry

8 Divisibility If broken down, it can’t lose its value
Change can be made

9 Durability Sturdy enough to last throughout many transactions

10 Uniformity Having features and markings that make it recognizable

11 Economic Characteristics of Money
Stability of value You must control inflation

12 Scarcity Money must be scarce to have any value

13 Acceptability Everyone must agree to its value
What two types of money did American citizens reject? 1. Susan B. Anthony dollar 2. 2 – dollar bill

14 What makes up the money supply in the United States?
Currency – coins and paper Checking account/demand deposits Near money – including savings accounts

15 Checks are not legal tender!
You cannot be forced to accept a personal check for payment of a debt. Over 80% of all spending is done through checks. Even if you use credit cards, you usually pay them off with a check.

16 Checks are safer than cash
You have a record of the transaction If you lose a check, you can stop payment If you lose a credit card, you can cancel the card If you lose cash, YOU LOSE!

17 Cashless Society?? Over the last 10 years, society has relied more on credit & debit cards Credit debt has gone up

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