Lesson-4-MArket-Integration. General Educationpdf

How market works and contribute to the economy

1. CONTEMPORARY WORLD
LESSON 4
MA. MONIKKA F. JANDA
COLLEGE INSTRUCTOR

2. MARKET
INTEGRATION

4. WHAT WOULD
THE WORLD
BE LIKE
WITHOUTMONEY?

5. DO YOU THINK
COUNTRY CAN
OPERATE
WITHOUT
MONEY?

6. As you can See, money offers consumers and
businesses Some Very basic and practical
benefits. Money was invented as an alternative to
bartering. The major benefit of money is that it
increases the efficiency of an economy by
reducing transactions costs. When people can use
money instead of bartering, this leads to more
Specialization and better division of labor within
the economy (mishkin, 2007).
BENEFITS OF MONEY

7. THREE
TYPES
OF
MONEY
COMMODITY MONEY
REPRESENTATIVE MONEY
FIAT MONEY

8. This type of money has intrinsic value based
on the underlying commodity. Examples
include gold, silver, and cattle. In other
words, it can be used for both monetary
purposes and as a commodity itself.
COMMODITY MONEY

9. EXAMPLE:

For example, gold has been used as commodity money
for thousands of years. Suppose Mary decided to pay Carl
with a gold bar that She inherited from her European
grandfather - this would be an example of commodity
money being exchanged. In Short, if we used gold coins to
buy things, that would be an example of commodity money.

COMMODITY MONEY

10. This is a type of money that represents a
commodity but does not have intrinsic value.
Examples include paper money that is
backed by gold or silver. It is valuable
because it can be exchanged for the
underlying commodity.
REPRESENTATIVE MONEY

11. Tobacco became such a big deal during this time
that people would store their tobacco in a
warehouse and receive a receipt showing that they
owned a certain amount of tobacco in the
warehouse. A tobacco warehouse receipt quickly
became representative money because this receipt
was backed by tobacco sitting in a warehouse.
REPRESENTATIVE MONEY

12. EXAMPLE:
Suppose Carl and Mary lived in colonial days, and,
of course, Carl was just as attracted to mary’s cakes
as he is right now. When Carl wants to pay for a
chocolate cake in colonial days, then he would use a
tobacco receipt.
REPRESENTATIVE MONEY

13. REPRESENTATIVE MONEY
Representative money is treated just as if it
was real money, even though it is not. In
today's economy, a check from a check book is
an example of representative money because it
represents moneybut it is not the money itself.

14. FIAT MONEY
This is money that has no intrinsic value
and is not backed by any commodity. Its
value is derived from government decree
or legal tender laws. Examples include
modern-day paper currency and coins.

15. FIAT MONEY
EXAMPLE:
US Dollar (USD): The official currency of the United States.
Euro (€): The official currency of the European Union.
Philippine Peso (PHP): The official currency of the
Philippines.
Japanese Yen (JPY): The official currency of Japan.
British Pound Sterling (£): The official currency of the
United Kingdom.

16. FUNCTIONS OF MONEY
Money is a Unit of Account
Money is a medium of exchange
Money is a store of value
Money is a Standard of Deferred
Payment

17. MONEY AS A UNIT OF ACCOUNT
Money acts as a common measure of
value, allowing us to compare the worth
of different goods and services. It
provides a standardized way to express
prices and facilitate transactions.

18. EXAMPLE
For example, when Mary sells cakes in her bakery. She offers the cakes for
sale at a certain price. That price is quoted in terms of money. Say, She has
a chocolate cake Selling for P500. When Mark sells his lawn service,he
charges P1000 per yard. If you think about it, Mark’S lawn serviceis really
worth two of Mary's chocolate cakes, and Mary’s P500 cake is worth a half
of Mark’s lawn service. Since Mark is not the only customer that Mary has,
and Mary is not Mark’S only customer, they need a unit of account that
works for everyone in the economy. In this way, money functions as a unit of
account, which is the foundation of every transaction taking place around
us.

19. Money serves as a widely accepted
means of payment for goods and
services. It eliminates the need for
barter, where individuals would have to
exchange goods directly.
MONEY AS A MEDIUM OF EXCHANGE

20. EXAMPLE
For Mark, he wants chocolate cake and lots of it.
Every time he buys a cake from Mary’S bakery, he
exchanges the money he earned from his job for a cake.
Money serves as an important medium of exchange in the
economy, empowering people to purchase goods and
services in an attempt to satisfy their unlimited needs
and wants.

21. Money can be held and used to purchase
goods and services in the future. It provides
a way to store wealth and defer
consumption. This allows people to save
money for later use or to invest in assets.
MONEY AS A STORE OF VALUE

22. EXAMPLE
Money is a Store of Value because Mark can exchange his
lawn services for money one day and then use it to
purchase goods and services at a later date (mises, 1981).
When he earns his paycheck, he cashes it at the bank, for
example. Mark can hold on to that cash in his wallet for a few
minutes, a few days or even a few months or years beforehe
decides to exchange the money for one of Mary’s cake

23. Money serves as a standard for future
payments, enabling individuals and
businesses to borrow and lend funds with the
understanding that the debt will be repaid in a
specific amount of money at a later date.
MONEY AS A STANDARD DEFERRED PAYMENT

24. EXAMPLE
For example, when Mark needs a new commercial lawn
mower with a built-in TV, he borrows the money from the
bank. They require him to make a small down payment of
cash today, however, he pays for most of the cost of the
mower through monthly loan payments over time. When Mark
buys now and pays later over time, money is functioning as a
Standard of deferred payment.

25. Liquid Assets are assets that can easily be
exchanged for cash. While assets are valuable
possessions that can be converted into cash.
REMEMBER:
Not all of your assets can be sold for cash right
now, or without taking a loss on the sale.
LIQUID ASSETS

26. THANK YOU
TO EVERYONE PRESENT HERE

27. If you are to design the 21St century paper
bill, Showing the integration of marketS
around the globe, how will it look like?
Create your own deSign of any paper bill that
would beSt repreSent the global economy. You
may uSe coloringmaterialS to make your paper
bill more creatiVe.
ACTIVITY

29. CHALLENGES IN FOREIGN INVESTMENT
Political instability can
be caused by conflict,
frequent changes in
government, or
inconsistent policies
Complicated licensing
processes and strict
regulations can lead
to increased
investment costs
Business operations
can be hampered and
operational costs can
increase due to
inadequate