Show me the MONEY!!! Mr. Burdette – Economics MHS – 2012/2013

How cool is money? Freaking awesome yE yE

What did we do before money? Zvw Zvw

What does money do? Medium of Exchange – Legal Tender Standard of Value – allows us to measure cost against each other Store of value – Must hold value – What happens when money cannot hold its store of value? – U U

The six characteristics of MONEY! Acceptability – must be accepted by all for debts Scarcity – Must be scarce enough to have value (like diamonds) Portability – Must be easily portable

Continued Durability – Must hold up to daily use Uniformity – All dollars must be equal Divisibility – Must be able to make change

Purchasing Power The quantity of goods and services that can be bought with a particular sum of money – Purchasing power decreases with inflation

A Brief History of Money Commodity Money – good that has value as a trade – Roman soldiers paid in salt – Japanese rice – Gold and Silver Commodity-Backed Money – Started in the Renaissance to keep Gold and Silver Safe (banks issues notes to represent gold and silver reserves)

What Counts as Money M1 – Liquid Assets (Cash, Travelers Checks, Checking Accounts) M2 – Near Money (Savings Accounts, Debit Cards, Credit Cards)

Banks What purpose do they serve in our country? How do they make money?

What is the FED? Federal Reserve Bank of the United States They print your money! Prop up other banks (when commercial banks run out of money)

KM KM