The Evolution of Money (cont.) In a barter economy, exchange of goods and services must have a “mutual coincidence of wants.” Money in primitive societies Commodity money Fiat money Section 1

Characteristics and Function of Money (cont.) Characteristics of money Portable Durable Divisible into smaller units In limited supply Section 1

Characteristics and Function of Money (cont.) Functions of money in the economy Medium of exchange Measure of value Store of value Section 1

Characteristics and Function of Money (cont.) The Fed has different definitions for the money supply. M1 M2 Section 1

Money People began using money because it made buying and selling easier than bartering. VS 1