lectur4-page5 - services you desire(bartering) you are paid...

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If the dollar is not “backed” by gold or anything else, how does money have value? The dollar is only “backed” by faith. The fact that most people want money, and that there are not enough dollars floating around out there such that everybody can have all the dollars they want. These two elements are what gives money value. If we lose faith in the value of our money, then it will become worthless. Money is simply an efficient “medium of exchange”. Rather than being paid in commodities for work performed, and then trading those commodities for other goods and
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Unformatted text preview: services you desire(bartering) you are paid money that you use to purchase the services you desire(bartering), you are paid money that you use to purchase the goods and services you desire. Think about it, it is much more efficient to go to Walmart with a pocket of dollar bills than it is to go to Walmart with a truck load of chickens and then try to swap chickens for the items you need. Then Walmart has got to swap your chickens for the goods that they purchase to stock the store. This can become very time consuming and costly. Money is simply more efficient. 5...
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This note was uploaded on 12/29/2011 for the course ECO 210 taught by Professor Malls during the Fall '10 term at SUNY Stony Brook.

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