Post on 21-Jan-2016
Money 10.1money 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?
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.
When using a credit card, the card issuer pays the store.
Show me the money!!!