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20 download_doc-9.php - BUS-G 345 Lecture 1 1/13/2011 What...

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BUS-G 345 Lecture 1 1/13/2011 What is Money? I. Intro a. Monetary policy is management of the monetary aggregate (money) b. Money exists to facilitate the exchange of goods and services i. If we do not have an efficient means of exchange, we will end of doing everything by ourselves ii. To facilitate the exchange can result in a rise in standard of living II. Methods of Exchange a. Barter i. Goods exchanged directly ii. Problem: Requires double coincidence of wants 1. If exchange bread and furniture- you need to need bread and the other person needs to need furniture a. Increases transaction costs i. Decreases the efficiency of the exchange b. Government allocation i. Authority allocates goods and services ii. Problem: the gov will distribute the goods and services arbitrarily 1. Not about who valued the good or service the most a. distorts the market iii. Difficult to make prices reflect cost and demand 1. price of the good doesn’t reflect the value of the good c. Money i. Goods exchanged for money
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BUS-G 345 Lecture 1 ii. Eliminates double coincidence of wants iii. Most efficient means of exchange
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20 download_doc-9.php - BUS-G 345 Lecture 1 1/13/2011 What...

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