Federal Reserve Paper

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1 Federal Reserve Paper Federal Reserve Paper Tonia Pieper University of Phoenix Principals of Economics Watson Ragin May 4, 2009
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2 Federal Reserve Paper The purpose of money is simply a medium of exchange that is widely accepted in  payment for goods and services and in settlement of debts.  As a medium of exchange  and a measure of value it facilitates the exchange of goods and services.  Without  money, trade would be reduced, or the direct exchange of one commodity for another.  As trade begins to develop, man devised the use of money as a tool to make buying  and selling simple.  Therefore, money served as a standard of value for measuring the  relative worth of different goods or services.   The function of money is used for the medium of exchange, unit of account,  standard of deferred payment and store of value.  Medium of exchange is the exchange  for the things that they buy is the medium of exchange.  As we have seen, this is the  function that defines money.  The unit of account is the unit in which values are stated,  recorded and settled.  The differences between this and the medium of exchange may  seem subtle, but there are a few cases in which the unit of account is different from the  unit in which the medium of exchange is expressed.  Deferred payments means a 
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This note was uploaded on 07/13/2011 for the course PSYCH 330 taught by Professor Smith during the Spring '10 term at University of Phoenix.

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