1. Warm up- “money, one of the greatest instruments of individual freedom ever invented by man” Do you agree with the above statement? How can money be an instrument of individual freedom? http://www.econlib.org/library/Columns/y201 4/Schwartzparadox.html

2. Warm up- Barter wars! https://www.youtube.com/watch?v=K8pMPSk stQg According to this video clip, what is bartering? – “Bartering is…” Why is Steve Ortiz the “Barter King”? Bartering v Using money

3. Barter Turn to your partner and trade them something for their pen/ pencil What did you trade? Money Turn to your partner and pay them something for their pen/ pencil How much did you pay?

4. 9/28- Test scores are up, you will have a chance to review them on Block Day  New test score and absence policy Final drafts of CTR due tomorrow (for those who didn’t do SCC’s already)! There is no demand EUQ Agenda Bartering v trading 3 characteristics of money Liquidity Objectives: by the end of this class, you should be able to… List the three functions of money Compare and contrast bartering with currency Define liquidity and M1 money supply

5. Bartering v Using money BarteringUsing money

6. Currency In America, our currency is the dollar With your partner, list as many currencies as you can

7. Unit 2.2 – MONEY! Which of these might work well as money in our economy? Why or why not? – Chewing gum – Pebbles – Cell phones – Chocolate chip cookies Currency is a type of money but not all money = currency

8. MONEY ka-ching Any substance that is used as a medium of exchange, measures value and has a store of value

9. Ch. 8.2 Functions of Money 1.Medium of Exchange – something that is accepted by all parties as payment for goods & services, as opposed to bartering 2.Measure/Standard of value – Money helps us figure out how valuable something is. This measurement allows us to compare prices 3.Store of value – Something that maintains its value over time so it doesn’t need to be exchanged or used immediately.

10. FUNCTIONS OF MONEY Item Medium of exchange Standard of ValueStore of Value Salt Large stone wheels Cattle Gold Copper coins Personal checks Savings account Prepaid phone card Debit card Credit card Playing cards Bushels of wheat $ 10 bill Evaluate how well each item listed would perform the functions of money in today’s economy. If an item fulfills a function, put a + in the box; if doesn’t fulfill the function put a – ; if you are unsure put a ?. The item with most + signs would be the best form of money for you.

11. Liquidity There are many different ways to store money in our economy Liquidity means how quickly you can get your hands on your cash. In simpler terms, liquidity is to get your money whenever you need it. Liquid assets are the best for exchange Some ways of storing money are more liquid than others

12. Some money is less “liquid”

14. Liquidity and the money supply M1 Narrowest definition of money More liquid M2 Slightly looser definition of money Less liquid

15. The Money Supply Narrowly defined by economists as currency (coins and paper money) in the hands of the public plus checkable deposits that are liquid and can be used to purchase goods and services (M1) The supply of money in the economy is important for price stability and economic growth. Too much money in the economy can cause inflation or an increase in prices. Too little money in the economy can lead to falling prices and falling production. The Federal Reserve controls the money supply through monetary policy. This policy works by encouraging or discouraging banks from making loans.