This is “Managing Financial Resources”, chapter 13 from the book An Introduction to Business (index.html) (v. 2.0). This book is licensed under a Creative Commons by-nc-sa 3.0 ( 3.0/) license. See the license for more details, but that basically means you can share this book as long as you credit the author (but see below), don't make money from it, and do make it available to everyone else under the same terms. This content was accessible as of December 29, 2012, and it was downloaded then by Andy Schmitz () in an effort to preserve the availability of this book. Normally, the author and publisher would be credited here. However, the publisher has asked for the customary Creative Commons attribution to the original publisher, authors, title, and book URI to be removed. Additionally, per the publisher's request, their name has been removed in some passages. More information is available on this project's attribution page () . For more information on the source of this book, or why it is available for free, please see the project's home page () . You can browse or download additional books there. i
Chapter 13 Managing Financial Resources How to Keep from Going Under How can you manage to combine a fantastic business idea, an efficient production system, a talented management team, and a creative marketing plan…and still go under? It’s not so hard if you don’t understand finance. Everyone in business—not finance specialists alone—needs to understand how the U.S. financial system operates and how financial decisions affect an organization. Businesspeople also need to know how securities markets work. In this chapter, we’ll discuss these three interrelated topics. Let’s start by taking a closer look at one of the key ingredients in any business enterprise—money. 685
Figure 13.1 Money itself has no intrinsic value. © 2010 Jupiterimages Corporation 13.1 The Functions of Money LEARNING OBJECTIVE 1.Identify the functions of money and describe the three governmentmeasures of the money supply. 1. A medium of exchange 2. A measure of value 3. A store of value To get a better idea of the role of money in a modern economy, let’s imagine a system in which there is no money. In this system, goods and services are bartered —traded directly for one another. Now, if you’re living and trading under such a system, for each barter exchange that you make, you’ll have to have something that another trader wants. For example, say you’re a farmer who needs help clearing his fields. Because you
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