Lecture_Economics_Notes_4-20-2010 - Lecture Notes Chapter...

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Lecture Notes Economics T-Th A. Ordonez 809-195-3K1C 4/20/10 Chapter 21 The Monetary System Money - is the set of assets in an economy that people regularly use to buy goods and services from other people. Money has three functions in the economy: o Medium of exchange o Unit of account o Store of value Medium of Exchange: o A medium of exchange is an item that buyers give to sellers when they want to purchase goods and services. o A medium of exchange is anything that is readily acceptable as payment. Unit of Account: o A unit of account is the yardstick people use to post prices and record debts. Store of Value o A store of value is an item that people can use to transfer purchasing power from the present to the future. Liquidity is the ease with which an asset can be converted into the economy’s medium of exchange. The Kinds of Money: Commodity money takes the form of a commodity with intrinsic value. o
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This note was uploaded on 05/10/2010 for the course ECONOMICS 809-195-3K taught by Professor A.ordonez during the Spring '10 term at Gateway Tech.

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Lecture_Economics_Notes_4-20-2010 - Lecture Notes Chapter...

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