ECO 212 Week 5 Individual Assignment Federal Reserve Paper

ECO 212 Week 5 Individual Assignment Federal Reserve Paper...

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Federal Reserve 1 ECO212 Federal Reserve Amanda Stockwell ECO212 Individual Assignment Week 5
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Federal Reserve 2 ECO212 Economists assigned the word money as a medium that can be exchanged for goods and services and measures the values on the market. The value of money falls when prices rise. “This link between the price level and the value of money will turn out to be important to understanding how money affects the economy (Mankiw, 2007).” The monetary systems intention is to put more money into the economy’s circulation to increase production and employment. Our economies and markets evolve around money. Money makes it easier for people to trade for goods and services. “Money has three functions in the economy: It is the medium of exchange, a unit of account, and a store of value. These three functions together distinguish money from other assets in the economy, such as stocks, bonds, real estate, art, and even baseball cards” (Mankiw, 2007 ). Money is used as an agent for trade between 2 parties; People use it to for purchases from any store. The “unit of account is the yardstick people use to post prices and record debts” (Mankiw, 2007). Sometimes credit cards are used instead of money. When cards are charged, companies that own the cards require payment with tangible money. A store of value occurs when an individual holds money or a good with intent to buy or sell something in the future that allows a profit to be made.
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ECO 212 Week 5 Individual Assignment Federal Reserve Paper...

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