money and trade

Money and Trade

Functions of MoneyHas three functions:

1. Medium of exchange.

2. Store of value. 3. Measure of value.

Types of MoneyAnything people are willing to exchange for goods

can be considered money. Most common types of money today:

Coins = metallic forms of money.Currency = coins and paper money.Checking AccountsSavings Accounts

Financial InstitutionsCommercial BanksSavings and Loan Associations (S&Ls)Credit Unions

Protecting the Financial SystemFederal Deposits Insurance Corporation (FDIC) Insures individual accounts in financial institutions for up to $100,000!!

Why does Money have value?

Because WE say so!

TradeMoney facilitates trade because its value can transfer between countries.

Why do we trade? Because trade creates VALUE!

Trade Creates Value Activity

Trade Creates Value ActivityThere will be 5 groups.

Group 1 Group 2 Group 3 Group 4 Group 5

Round OneWithout looking - pick a piece of candy out of the

bag (DO NOT EAT IT YET!)Rate your happiness with the candy from 1-10 –

record this number1 being least happy10 being most happy

On your guided notes, write the sum of your group’s ratings under round one.

Round TwoTrade candies within your group – everyone must

trade!Rate your happiness with the candy from 1-10 –

record this rating1 being least happy10 being most happy

On your guided notes, write the sum of your group’s ratings under round two.

Round ThreeNow everyone must trade outside of your borders / group –

So now, Trade candies with someone in a different group.Once you trade - GO BACK TO YOUR GROUP!Rate your happiness with the candy from 1-10 – record this

number1 being least happy10 being most happy

On your guided notes, write the sum of your group’s ratings under round two.

GO BACK TO YOUR SEATS!Share your sums with the rest of your class.

What was happening?**You can eat your candy while we discussWhat did the trade within your group

represent?National Trade

What did the trade between the groups represent?International Trade

Did trading increase your happiness with the candy you received? Why or why not?

Did you end up happier or less happy than you started? Why?

CW/HLARead Chapter 21.3

Reminders:Study for Economics Test on Thursday!Econ Notes due Thursday!