Money Summary ch3-4

Money Summary ch3-4 - Chapter 3 Economics Definition of...

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Chapter 3 Economics Definition of Money – Anything that is accepted for payment of goods and services Income – Flow of earnings per unit of time Functions of Money Medium of Exchange o Reduces transaction costs o Encourages specialization and encourages specialization o Requirements of money: easy to standardize, widely accepted, divisible (easy to make change), easy to carry, must not deteriorate quickly Unit of Account o Used to measure value of a good in an economy in money terms Store of Value o Can keep money for some time from the time it is earned to the time it is spent Compared to other things which serve the quality store of value money is the most liquid (easy to convert into a medium of exchange) Hyperinflation – inflation exceeds 50% per month Evolution of the Financial System Evolution of the Payment System o Commodity Money – Uses rare metals such as gold and silver (Coins). Heavy.
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This note was uploaded on 02/13/2012 for the course ECON 101 taught by Professor Teerana during the Spring '11 term at Thammasat University.

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Money Summary ch3-4 - Chapter 3 Economics Definition of...

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