ECON2035_Ch.2_Notes_Jsolite

ECON2035_Ch.2_Notes_Jsolite - Ch. 2: Money and Central...

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Ch. 2: Money and Central Banks Fed eral Reserve System – the Central bank of the U.S. Central Bank – institution that controls an economy’s MS 2.1: What is Money? o Money – class of assets that serves as an economy’s medium of exchange o Money demand – amount of wealth that people choose to hold in the form of money Barter – system of exchange in which g & s are traded directly, with no money involved (Ex: farmers trading their milk to the potter for bowls.) Double coincidence of wants – condition needed to barter: each party to a transaction must have something the other wants. o Unit of account – measure in which prices and salaries are quoted o Store of value – form in which wealth can be held 2.2: Types of Money o Commodity money evolved to fiat money o Alternatives to a National Currency – see notes
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This note was uploaded on 07/10/2011 for the course ECON 2035 taught by Professor Stahl during the Summer '08 term at LSU.

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ECON2035_Ch.2_Notes_Jsolite - Ch. 2: Money and Central...

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