anything that people will accept as payment for goods & services
TRANSCRIPT
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MONEY
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Anything that people will accept as payment for goods & services
What is money?
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Commodity MoneyDerives its value from the type
of material from which it is composedBest example in history are
coins made from precious metals
Problem w/commodity money people hoard it if it becomes too valuable
Types of Money
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Paper money backed by something hard (gold/silver)
Representative Money
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Nothing hard backing it, but declared by the gov’t & accepted by citizens to have worth
Started in 1971Gov’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.
Fiat Money
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Medium of exchangeMeasure of valueStore of value
Functions of Money
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PortableMoney needs to be small, light & easy to carry
Paper $ is easy to carry
Physical Characteristics of Money
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If broken down, it can’t lose its value
Change can be made
Divisibility
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Sturdy enough to last throughout many transactions
Durability
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Having features and markings that make it recognizable
Uniformity
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Stability of valueYou must control inflation
Economic Characteristics of Money
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Money must be scarce to have any value
Scarcity
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Everyone must agree to its value
What two types of money did American citizens reject?1. Susan B. Anthony dollar2. 2 – dollar bill
Acceptability
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Currency – coins and paperChecking account/demand deposits
Near money – including savings accounts
What makes up the money supply in the United States?
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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.
Checks are not legal tender!
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You have a record of the transactionIf you lose a check, you can stop
paymentIf you lose a credit card, you can cancel the card
If you lose cash, YOU LOSE!
Checks are safer than cash
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Over the last 10 years, society has relied more on credit & debit cards
Credit debt has gone up
Cashless Society??