Introduction to Money.pptx

Money is a system the exchange of goods in an economy of every country. Using money allows buyers and sellers to pay less in transaction costs, compared to barter trading in history of Human life.

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2. Learn about Money

3. Money is the set of assets in the economy that people regularly use to buy goods and services from other people . Money is the stock of assets that can be readily used to make transactions Money anything generally accepted as payment for goods and services . Example: Currency , C oin , Demand D eposit , Gold etc. The Meaning of Money

4. The History of Money First, there was barter. M oneyless economy that relies on trade or barter, t hen, there was Commodity money. This money takes the form of a commodity with intrinsic value. Examples: Gold, Silver. When people use gold as money, the economy is said to be on a gold standard Finally there was Flat money is used as money because of government decree. It does not have intrinsic value, it has value because of decree. Examples: Coins, currency, check deposits.

5. Without money Trade would require barter : the exchange of one good or service for another. Requires a double coincidence of wants : unlikely occurrence that two people each have a good the other wants. Waste of resources: people spend time searching for others to trade with Using money Solves those problems What Money is and Why It’s Important

6. The Three Functions of Money Medium of exchange Item that buyers give to sellers when they want to purchase goods and services Unit of account Yardstick people use to post prices and record debts Store of value Item that people can use to transfer purchasing power from the present to the future

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