We will be using Cornell Note Taking Format Today! Money Money Money! Money Money Money! One Step at a time to to Success in Economics class!
Unit Five: Learning Objectives: North Clackamas School District Social Studies Priority Standards: Econ 46. Distinguish between fiscal and monetary policies and describe the role and function of the Federal Reserve.
Lesson One: Daily Learning Target I Can define and explain in writing the following key Economic concepts: The Three uses of Money The Six Characteristics of Money
Money is anything that is generally acceptable that serves as a medium of exchange, a unit of account, and a store of value. What Is Money?
Barter – goods and services were traded without the exchange of money. However, before trade could occur, there had to “double coincidence of wants” be a “double coincidence of wants”. E ach trader had to have something the other wanted. I’ll trade you a chicken for a pair of shoes. I would love to sell you these shoes but I can’t eat chicken, due to my bad teeth, caused by smoking. barter economychicken In a barter economy a chicken shoes farmer who wants to buy shoes chickens may have to first trade chickens apples apples for apples and then apples for shoes shoes because the guy selling shoes apples shoes wants only apples. Money eliminates this problem.
pineapples broccoli Or, a heart surgeon might accept only certain goods ( like pineapples ) but not others ( like broccoli ) b ecause he doesn’t like broccoli. You are lucky you are a pineapple farmer and not a broccoli farmer. I hate broccoli.
. less expensiveIt is less expensive to use money. saves timetime is moneyUsing money saves time and time is money. “calculation of exchange”bartering The “calculation of exchange” by bartering is “calculation of exchange” much slower than the “calculation of exchange” monetary system in a monetary system. less expensive It is less expensive to use money. “calculation of exchange”fast and easy The “calculation of exchange” is fast and easy because whatever the price is, you pay that amount.$3.00 Here’s $3.00 for one gallon.
Money is also easier to tax. So a monetary system is better than a barter system. T he m onetary system enables the “calculation of exchange” to go much faster.
The Three Uses of Money: Money as Medium of Exchange A medium of exchange is anything that is used to determine value during the exchange of goods and services. Money as a Unit of Account A unit of account is a means for comparing the values of goods and services. Money as a Store of Value A store of value is something that keeps its value if it is stored rather than used.
The coins, paper bills, or anything used as money in a society is called currency. A currency must meet the following characteristics: Durability Objects used as money must withstand physical wear and tear. Portability People need to be able to take money with them as they go about their business. Divisibility To be useful, money must be easily divided into smaller denominations, or units of value. Uniformity Any two units of money must be uniform, that is, the same, in terms of what they will buy. Limited Supply Money must be available only in limited quantities. `Acceptability Everyone must be able to exchange the money for goods and services. The Six Characteristics of Good Money:
Commodity Money Commodity money consists of objects that have value in themselves. Representative Money Representative money has value because the holder can exchange it for something else of value. Flat Money: “Flat money”, also called “legal tender,” has value because the government decreed that is an acceptable means to pay debts. The Sources of Money’s Value