Mr. Nunn The Origins of Money. Barter Economy An economy in which trades are made in goods and services instead of in money.

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Presentation transcript:

Mr. Nunn The Origins of Money

Barter Economy An economy in which trades are made in goods and services instead of in money.

Transaction Costs The costs associated with the time and effort needed to search out, negotiate, and consummate an exchange.

Money A good that is widely accepted for purposes of exchange and in the repayment of debt.

The Major Functions of Money FunctionDefinition Medium of ExchangeAnything that is generally acceptable in exchange for goods and services. Unit of AccountCommon measurement in which values are expressed. Store of ValueAn Item that maintain value over time.

Early Bankers Goldsmiths Fractional Reserve Banking- A banking arrangement in which banks hold only a fraction of their deposits and lend out the reminder.