EC102-10SPRING09_J24_lecture

EC102-10SPRING09_J24_lecture - 101 1Money "Money is...

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1Money “Money is the most important thing in the world"  George Bernard Shaw. Definition is anything that is generally accepted as payment for  goods and services or as settlement of a debt Without money, exchange would take place by barter Barter  o The direct exchange of goods and services without the use  of money 10-1
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o Requires a double coincidence of wants  o Costly and inefficient Three Basic Functions of Money o Medium of Exchange o Money serves as a medium of exchange when it is used to  buy goods and services o Most important function of money 10-2
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o Store of Value o Money and other valuables put away for future use o Other valuables may include paintings, real estate, jewellery o The ease with which a store of value can be converted into a  medium of exchange is known as ‘liquidity” o Money is the most liquid of all assets 10-3
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o Unit of Account
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EC102-10SPRING09_J24_lecture - 101 1Money "Money is...

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