Lecture_10_spring_2009 - Lecture 10 Econ 2 Monetary...

Info icon This preview shows pages 1–22. Sign up to view the full content.

View Full Document Right Arrow Icon
Lecture 10 Econ 2 Monetary Economics
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Tracking the Economy
Image of page 2
Tracking the Economy
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Question on Money In the U.S. today, money is: A) backed by gold B) backed by gold and silver C) not backed by anything D) backed by U.S. Treasury Certificates
Image of page 4
Question on Money In the U.S. today, money is: C) not backed by anything
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Fiat Money Money that is not backed Main Entry: fi·at Pronunciation: \ ˈ fē- t, - ə ˌ at, - ˌ ät; ˈ fī- t, - ə ˌ at\ Function: noun Etymology: Latin, let it be done, 3d singular present subjunctive of fieri to become, be done Date: circa 1631 1 : a command or act of will that creates something without or as if without further effort 2 : an authoritative determination : dictate <a fiat of conscience> 3 : an authoritative or arbitrary order : decree <government by fiat >
Image of page 6
Fiat Money Why accept fiat money? A) The gov. insures it B) Because others will accept it C) It’s a mystery D) The government decreed it to be good
Image of page 7

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Fiat Money Why accept fiat money? B) Because others will
Image of page 8
Money Money Any asset that can be used in making purchases Examples » Currency » Coins » Checks
Image of page 9

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Money Credit cards A) are not considered as money B) are considered as money C) are considered as loans D) A and C E) B and C
Image of page 10
Money Credit cards D) A and C
Image of page 11

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Why Money? Because barter is difficult! Barter The direct trade of goods or services for other goods or services
Image of page 12
Why Money? Therefore, money makes it easier to trade With barter some trades would not take place Makes us worse off compared to a world with money
Image of page 13

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Desirable Properties of Money Medium of Exchange—promotes economic efficiency by minimizing the time spent in exchanging goods and services Must be easily standardized Must be widely accepted Must be divisible Must be easy to carry Must not deteriorate quickly Portable Recognizable Divisible Durable
Image of page 14
Desirable Properties of Money Unit of Account—used to measure value in the economy Numeraire: An economic term that represents a unit of account. In French, the term means "money", "coinage" or "face value". A numeraire is usually applied to a single good, which becomes the base good. All similar goods are then valued and priced against the base good. This comparison makes it possible to identify which goods are worth more than others.
Image of page 15

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Desirable Properties of Money Store of Value—used to save purchasing power; most liquid of all assets but loses value during inflation
Image of page 16
Types of Money A very, very brief history
Image of page 17

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Types of Money Commodity money Earliest money (Greek and Roman civilizations Typically precious metals Gold, silver, copper Has other uses besides acting as money; has intrinsic worth.
Image of page 18
YAP ISLAND STONES
Image of page 19

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
COWRIE SHELL MONEY Maldivian Cowrie Shells (Commodity serving longest as money-- more than 1000 years)
Image of page 20
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern