ec-3 - does plan to consume or use or for an item that s/he...

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Intro to Money and Banking, Part II I. Deferred payments a. Payments which the buyer of an item makes after a significant amount of time has passed b. Credit c. Loans and bonds II. Why we have so many money and banking courses a. The original idea is that there were supposed to be courses about the payment system, but even 50 years ago people knew that payment systems was not a very sexy title for a course b. They knew that it was important to study the payment system III. Direct exchange a. A single exchange in which each participant obtains a good or service s/he wants to consume, or use in production, by giving up a good or service that s/ he did not obtain in trade, and that the other participant wants to consume or use in production. (Russell) IV.Indirect exchange a. A sequence of two or more exchanges in which a person starts by giving up a good or service s/he did not obtain in trade, in exchange for an item s/he plans to trade away. S/he then exchanges this item either for a good or service s/he
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Unformatted text preview: does plan to consume or use or for an item that s/he plans to trade away. Eventually, s/he will exchange an item s/he has obtained in trade for a good or service s/he plans to consume or use. (Russell) V. A basic question a. Why are direct exchanges so rare? VI.Exchange, money, and banking a. Production and exchange i. Robinson Crusoe economy 1. (autarky) ii. Autarky 1. An economic system in which people do not interact with each other. Economically, so that no one consumes anything s/he did not produce and no one produces anything s/he does not consume b. Inefficient i. It would be possible to produce more output without using anymore input ii. Production is inefficient if it is possible to increase the quantity of output without increasing the quantity of any input, or if it is possible to reduce the quantity of any input without reducing the quantity of output. c. Methods for improving efficiency of production i. Specialization (division of labor)...
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