Money 10.1 money video money video money video “He who loses money, loses much; He who loses a friend, loses much more; He who loses faith, loses all” Eleanor Roosevelt

Types of Money Commodity Money – a money system that is based on an item (such as silver, gold, diamonds, shells, etc…) that has value to a society.

Type of Money Representative money – Something (normally paper currency) can be exchanged for something else (normally precious metal). Like an IOU note

Type of Money Fiat money - the government says it is worth something, so it is.

Bartering Barter: The direct exchange of one good for another; to trade People bartered before there was money Bartering sometimes is inefficient and created the need for money.

Functions of Money 1. Medium of exchange, standardized item that is generally traded for goods or services 2. A unit of account, a measure of value that allows both producers and consumers to determine and express worth. 3. A store of value that can be saved and used to purchase items at a later date.

6 attributes of money Durability – will the money last? How strong is it? Portability – Can you carry it around with you? Divisibility – Is it easy to make change? Limited supply – does it have stability in value Acceptability - Are people willing to use the money? Uniformity - is it always the same?

How about…

They are not: DURABLE

6 attributes of money Durability – will the money last? How strong is it? Portability – Can you carry it around with you? Divisibility – Is it easy to make change? Limited supply – does it have stability in value Acceptability - Are people willing to use the money? Uniformity - is it always the same?

How about…

They are not: Portable

6 attributes of money Durability – will the money last? How strong is it? Portability – Can you carry it around with you? Divisibility – Is it easy to make change? Limited supply – does it have stability in value Acceptability - Are people willing to use the money? Uniformity - is it always the same?

How about…

They are not: Divisible

6 attributes of money Durability – will the money last? How strong is it? Portability – Can you carry it around with you? Divisibility – Is it easy to make change? Limited supply – does it have stability in value Acceptability - Are people willing to use the money? Uniformity - is it always the same?

How about…

It is not: Limited in supply

6 attributes of money Durability – will the money last? How strong is it? Portability – Can you carry it around with you? Divisibility – Is it easy to make change? Limited supply – does it have stability in value Acceptability - Are people willing to use the money? Uniformity - is it always the same?

How about…

It is not: Acceptable

6 attributes of money Durability – will the money last? How strong is it? Portability – Can you carry it around with you? Divisibility – Is it easy to make change? Limited supply – does it have stability in value Acceptability - Are people willing to use the money? Uniformity - is it always the same?

Let’s try this again…

It is not: Uniform

6 attributes of money Durability – will the money last? How strong is it? Portability – Can you carry it around with you? Divisibility – Is it easy to make change? Limited supply – does it have stability in value Acceptability - Are people willing to use the money? Uniformity - is it always the same?

The Value of Money Value: how much something is worth. Utility: how useful is something Value = Scarcity + Utility

Early Money

Credit Credit is the absence of money. You are borrowing money. The cost of credit is usually interest. Credit is the absence of money. You are borrowing money. The cost of credit is usually interest. When using a credit card, the card issuer pays the store.

Show me the money!!!