Public Policy #11 Origins of Money

Quiz – Thursday! If the gov decides to increase spending during an economic crisis, this is Deficit spending B. Supply Side Economics Trickle Down Theory D. All of the above Why do some people believe that increasing spending during a recession will actually help the economy? Which party generally supports this? Why do some believe that cutting taxes is the better answer? Which party generally supports this?

Trade me!

Barter Vacation Advantages Disadvantages

Functions of Money Medium of Exchange: anything accepted for payment Will you take gold for that? Unit of Account: standard on which to base prices 3 ears of corn for a loaf of bread Store of Value: retains purchasing power over time Steak won’t last forever….

Characteristics of $ Durable: lasting Portable: easy to carry w/you Divisible: divide into smaller units Stability in value: value does not fluctuate much Acceptable: ppl will accept the $ b/c they can use it elsewhere

Evolution of $ Commodity Money: both money & commodity = corn or gold Representative Money: money that is backed by something valuable (gold) Fiat Money: gov says $ has value US $ today Electronic Money: no longer tangible

Because of inflation, some people say you should invest in gold – since it always has value. What do you think – good idea?