3.1 Money

Define money.

any agreed commodity that can be used as a medium of exchange for goods & services

Define barter.

exchanging goods & services for other goods & services

Issues of Barter
__ c__ of __

double coincidence of wants

Issues of Barter
__ of __

measurement of value

Issues of Barter
p__

perishable

Characteristics of Money
u__ a__

universal acceptability

Characteristics of Money
d__

divisibility

Characteristics of Money
p__

portability

Characteristics of Money
d__
has to be h__ w__, l__ lasting, can’t be ruined under many conditions

durability

Characteristics of Money
s__

scarcity

What were the issues with coins?

people would skim shavings off coins to make extra coins

Functions of Money
M__ of e__
> any item widely a__ in e__ of goods & services

medium of exchange, acceptable, exchange

Define intrinsic.

has value on its own

Functions of Money
M__ of v__
> $$ allows c__ of v__ of diff products

measure of value, comparison, value

Functions of Money
S__ of v__
> $$ can be stored and u__ later

store of value, used

Functions of Money
M__ of d__ __
> $$ allows b__ now p__ later

means of deferred payment, buy, pay

Money loses value over time.
So, f__ a__ e.g. s__ are a good form of $$ bc:
> they store v__ & can be l__

financial assets, shares, value, liquid

Define spending.

purchasing goods & services to satisfy needs & wants

Define saving.

delaying consumption by holding onto a portion of income for future use

Define borrowing.

getting $$ from bank in order to use for a specific purpose

Define disposable income.

amt people have left to spend/save after all payments & taxes paid

↑Income = ↑s__, saving, & b__

spending, borrowing

↑Interest rates = ↓s__, ↑__ & ↓borrowing

spending, saving

↑Age = ↑__, often ↑income

experience

Young people tend to s__ more on n__ & w__

spend, needs & wants

people starting a f__ will s__ & b__ more on things like c__

family, spend, borrow, children