econ330ch2notes

econ330ch2notes - Chapter 2 Money as an asset generally...

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Chapter 2 Money – as an asset generally accepted as payment for goods and services or repayment of debt Money is a component of wealth that is held in a readily spendable form Money is make up of currency (coins and paper), checking account balances, other assets that can be turned into cash or demand deposits nearly instantaneous without risk or cost (liquid wealth) Distinctions among money and wealth and income Characteristics of money Serve as payment serve as store of value serve as unit of account Money as form of payment / medium of exchange money is accepted in economic exchange the alternative is barter for economics exchanges to occur using barter Money provides a convenient measuring rod when prices for all goods are quoted in terms of money It makes it easier to conduct economic transactions since there is a standard unit of trade Store of value – for money to function as a means of payment it has to be a store of value durable and capable of transferring purchasing power from one day to the next
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econ330ch2notes - Chapter 2 Money as an asset generally...

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