macro chapter 3

barter

trading one good or service for another, without using money

double coincidence of wants

a situation in which two people each want some good or service that the other person can provide

money

medium of exchange, store of value, unit of account, standard of deferred payment

medium of exchange

whatever is widely accepted as a method of payment

store of value

something that serves as a way of preserving economic value that one can spend or consume in the future

unit of account

the common way in which we measure market values in an economy

standard of deferred payment

money must also be acceptable to make purchases today that will be paid in the future (not included unanimously in the def. of money)

commodity money

an item that is used as money, but which also has value from its use as something other than money

commodity-backed currencies

currencies with values backed up by gold or another commodity

fiat money

has no intrinsic value, but is declared by a government to be the country’s legal tender