Presentation on theme: "Anything that people will accept as payment for goods & services."— Presentation transcript:
Anything that people will accept as payment for goods & services
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
Paper money backed by something hard (gold/silver)
Nothing hard backing it, but declared by the govt & accepted by citizens to have worth Started in 1971 Govt must control its supply or maintain its scarcity for the dollar to be worth more Why is U.S. money considered fiat money? Its only money because our govt says it is.
Medium of exchange Measure of value Store of value
Portable Money needs to be small, light & easy to carry Paper $ is easy to carry
If broken down, it cant lose its value Change can be made
Sturdy enough to last throughout many transactions
Having features and markings that make it recognizable
Stability of value You must control inflation
Money must be scarce to have any value
Everyone must agree to its value What two types of money did American citizens reject? 1. Susan B. Anthony dollar 2. 2 – dollar bill
Currency – coins and paper Checking account/demand deposits Near money – including savings accounts
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.
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!
Over the last 10 years, society has relied more on credit & debit cards Credit debt has gone up