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Barter vs. Money

Chapter 10Section 1 - Money

1. Describe the three uses of money.2. Explain the six characteristics of money.3. Understand the sources of money’s value.

Objectives

Medium of Exchange

Determines value Easier than Bartering

Unit of Account Ex. You can compare the price of a jacket

between stores Store of Value

Over time money will still be valuable

3 Uses of Money

1. Durability – Withstand wear and tear2. Portability – Easily carried and transferred3. Divisibility – easily divided into smaller units4. Uniformity – Measured accurately

a dollar bill is always able to buy $1 worth of goods5. Limited Supply – If supply is high the

money is less valuable6. Acceptability – Money can be exchanged for

goods and services anywhere

6 Characteristics of Money

Commodity Money

Used as money & also have value Representative Money

Have value because can be exchanged for something else of value

Paper receipts backed by gold Fiat Money

Its money cuz the government says so

Sources of Money’s Value

“Money bewitches people. They fret for it and

they sweat for it. They devise ingenious ways to get it and most ingenious ways to get rid of it. Money is the only commodity that it is good to be rid of. It will not feed you, clothe you, shelter you or amuse you unless you spend it or invest it. People will do almost anything for money and money will do almost anything for people. Money is a captivating, circulating, masquerading puzzle.”