The Functions and Characteristics of Money Chapter 14 The Functions and Characteristics of Money
The Functions of Money Money Medium of Exchange Unit of Accounting Seller accepts for a good or service Barter, exchange of a good or service Smaller societies Unit of Accounting Way of measuring value U.S. dollar, Japanese yen Store of Value- use at a later time
Characteristics of Money Can come in many forms. Should be Durable Portable Divisible Stable in Value Scarce Accepted
Types of Money Commodity money- cattle, gems Representative money Backed by gold or silver Give gold, get banknotes We used to use this Fiat money Gov’t says it is acceptable for debts Legal tender- money issued through the Gov’t