Ch 10

Money Money- anything that serves as medium of exchange Medium of Exchange- anything that is used to determine value during and exchange of goods and services Barter- direct exchange of one set of goods or services for another.

Unit of account- money provides the means for evaluating the value of goods or services Store of Value- money keeps its value if you decide to hold on the money –or store- it instead of spending it. Currency- coins or paper money

Durability- money withstanding the physical wear and tear of being used over and over again Portability- must be able to take it with you Divisibility- must be easily divided into smaller denominations Uniformity- Any two units of money must be uniformed in terms of what they will buy

Limited supply-Federal Reserve System Controls the supply of money in circulation Acceptability- Everyone must accept the value of the money and exchange it

Commodity Money- An object that has value in and of themselves and that are also used as money. EX salt, cattle, precious stones Representative Money- makes use of objects that have value because the holder can exchange them for something else of value Fiat Money- “legal tender” has value because the government has decreed that it is an acceptable means to pay a debt

1791 First Bank of the United States. To have a central location to deposit taxes collected by the Federal Govt. Help Federal Govt Borrow money on Publics behalf Issue Representative Money The ensure state charted banks held sufficient gold and silver on reserve to exchange for bank notes should that be necessary

1791- 1st bank charter for 20 years 1811 Charter Ran out. Not reinstated 1816 – 2nd Bank of the United States was chartered. +Bank Panic of 1837- Wildcat Banks- on edge of frontier Fraud Different Currencies

Greenbacks- 1861 Both North and South during Civil war needed a portable currency. United States treasury issued the first paper money since the Continental called GREENBACKS bc they were printed in green ink. They were also known as “ demand notes” The south issued Confederate Money backed by Cotton.