august 30 - US Money 2011 FIAT MONEY 25 1 Coin 2 Paper...

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Karina Santana August 30,2011 Money Functions of money 1. Medium of exchange: allows us to buy goods and services 2. Standard of value(unit of account) 3. Store of value BARTER? DIFFERENCE? In barter every transaction is different AKA double coincidence of wants Money= any generally accepted medium of exchange How much is money worth? Purchasing power- what you can get for your money Inflation: prices go up which means that the value of money declines Money evolution 1. Commodity money: money item that is also a useful commodity 2. Representative money : money item that represented a claim of something of value somewhere else 3. FIAT money : its worth the face value printed on it a. Legal tender: only sanction money of government( courts of the United States)
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Unformatted text preview: US Money 2011 FIAT MONEY 25% 1. Coin 2. Paper currency NON-FIAT 3. Checking account balance at banks( demand deposits) paper checks, electronic funds transfer(EFT) NEAR MONEY : financial assets that are not generally accepted as a medium of exchange but are valuable NEAR MONEY 1. Earn interest and or appreciate in value EXAMPLES: 1. Saving account 2. Certificate of deposit 3. U.S. treasury bills, notes, bonds 4. Municipal bonds 5. Corporate stocks 6. Real estate 7. Gold 8. Diamonds “ Money Supply” M1=All media of exchange M2= m1 +time+ saving deposit M3= M2+ corporate depreciation + financial instruments...
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