202 chapter 14 money and banking

202 chapter 14 money and banking - Click to edit Master...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Click to edit Master subtitle style 4/15/11
Background image of page 1

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

View Full DocumentRight Arrow Icon
4/15/11 211-2 The Definition and Functions of Money Money is a highly liquid financial asset. Liquid – easily changeable into another good or asset. Money serves as: A medium of exchange. A unit of account. A store of wealth.
Background image of page 2
4/15/11 311-3 Money as a Medium of Exchange Money facilitates exchange by reducing the cost of trading. Without money, we would have to barter. Money has no inherent value to function as a medium of exchange. It acts as a medium of exchange because people are willing to accept
Background image of page 3

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

View Full DocumentRight Arrow Icon
4/15/11 411-4 Money as a Unit of Account Money is used as a common denominator to measure the relative values of goods and services. Without money, we would have to measure the value of goods and services in terms of other goods and services. Money is a useful unit of account only if its value relative to the average of all other prices doesn’t change too quickly.
Background image of page 4
4/15/11 511-5 Money as a Store of Value Money is a financial asset that can be used to store wealth (income that you have saved and not consumed). As a store of wealth, money pays no interest, but is perfectly liquid. Money’s usefulness as a store of wealth depends on how will it maintains its value.
Background image of page 5

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

View Full DocumentRight Arrow Icon
611-6 Alternative Measures of Money M1 – currency in the hands of the public, checking account balances, and travelers’ checks.
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 22

202 chapter 14 money and banking - Click to edit Master...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online