unit v money
TRANSCRIPT
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Qualities of Money
•Stability•Portability•Durability•Uniformity•Divisibility•Recognizability
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Stability
•Value does not fluctuate a great deal
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Recognizability
•Hard to copy but easy to recognize
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Portability
•Small and light enough to carry with you
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Durability
•It lasts for a long time
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Uniformity
•Denominations have the same value across the board
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Divisibility
•You can make change
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What money does
•Eliminates the double coincidence of wants•You must find someone who wants what you want and will trade for what you have.
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Functions of money
•Medium-of-exchange•Store-of-value•Standard-of-value
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Medium-of-Exchange
•Eliminates double coincidence of wants
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Standard-of-Value
•Simplifies price comparisons
•Agreed to measure for stating prices
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Store-of-Value
•Permits money to be held for use at a later time
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Kinds of Money
•Currency•Checkable deposits
•Travelers checks
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Currency
•Paper money and coins•Also known as Fiat money
•Has value because the government says it does
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Checkable Deposits
•Can make withdrawals and payments by check•Savings•Credit Unions
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Travelers Checks
•Duh!! It’s a travelers check!
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Sources of Money’s Value• Representative Money
•Item that has value because it can be exchanged for something valuable
• Commodity Money•An item that has value of its own
and is used as money
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Categories of Money
•M1•M2•M3
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M1
•Currency, Checkable Deposits, Travelers Checks
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M2
•M1+Money Market Accounts, Savings Accounts, Mutual Fund Accounts
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M3
•M2+Large CD’s (100,000+)