1. MONEY

2. What is money?
Anything that people will accept as payment for goods & services

3. Types of Money Commodity Money
Derives its value from the type of material from which it is composed
Best example in history are coins made from precious metals
Problem w/commodity money  people hoard it if it becomes too valuable

4. Representative Money
Paper money backed by something hard (gold/silver)

5. Fiat Money
Nothing hard backing it, but declared by the gov’t & accepted by citizens to have worth
Started in 1971
Gov’t must control its supply or maintain its scarcity for the dollar to be worth more
Why is U.S. money considered “fiat money?”
It’s only money because our gov’t says it is.

6. Functions of Money
Medium of exchange
Measure of value
Store of value

7. Physical Characteristics of Money
Portable
Money needs to be small, light & easy to carry
Paper $ is easy to carry

8. Divisibility If broken down, it can’t lose its value
Change can be made

9. Durability
Sturdy enough to last throughout many transactions

10. Uniformity
Having features and markings that make it recognizable

11. Economic Characteristics of Money
Stability of value
You must control inflation

12. Scarcity
Money must be scarce to have any value

13. Acceptability Everyone must agree to its value
What two types of money did American citizens reject?
1. Susan B. Anthony dollar
2. 2 – dollar bill

14. What makes up the money supply in the United States?
Currency – coins and paper
Checking account/demand deposits
Near money – including savings accounts

15. Checks are not legal tender!
You cannot be forced to accept a personal check for payment of a debt.
Over 80% of all spending is done through checks.
Even if you use credit cards, you usually pay them off with a check.

16. Checks are safer than cash
You have a record of the transaction
If you lose a check, you can stop payment
If you lose a credit card, you can cancel the card
If you lose cash, YOU LOSE!

17. Cashless Society??
Over the last 10 years, society has relied more on credit & debit cards
Credit debt has gone up