Complications of barter system a unit of account

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complications of barter system A Unit of Account : money measures the value of all goods and services. Money acts as a measurement of value • 1 goat= $50 = 5 chickens or 1 chicken= $10 • A Store of Value : money allows you to store purchasing power for the future 3 Types of Money Liquidity : ease with which an asset can be accessed and converted into cash (liquidized) • M1 (High Liquidity) : coins, currency, and checkable deposits (personal and corporate checking accounts) • In general this is the MONEY SUPPLY M2 (medium) : M1 plus savings deposits (money market accounts), time deposits (CDs= certificates of deposits), and Mutual funds below $100K M3 (low) : M2 plus time deposits about $100K Unit 4 Notes Credit vs Debit Card • A credit card is NOT money. It is a short-term loan (usually with higher than normal interest rate) ex : buy a shirt with a VISA card, VISA pays the store, you pay VISA the price of the shirt and an added interest fee Personal Finance • Personal finance refers to the way individuals and families budget, save, and spend • Personal finance class: • Checking and savings accounts • credit cards • loans • stock market • retirement plans • managing your assets • Assets : anything of monetary value owned by a person or business • Investment refers to business spending. Personal Investments refers to asset management of individuals.
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