1. Personal Finance Mr. Hargett 2013-14
Money Part 2
Personal Finance
Mr. Hargett

2. Pre Money Hunter Gathering Societies Agrarian Societies Next Step?
Self Providing
Agrarian Societies
Next Step?
Barter System- Exchange of goods or services

3. Function of Money A medium of exchange A unit of account
The Most important function
A unit of account
A store of value

4. Commodity Money
Example
Corn
????

5. 7 Desirable Qualities of Ideal $$$
Durable
Money should not wear out quickly
Paper money, coins, sea shells
Portable
Money should be easy to carry, even large sums
Diamonds, paper money
Divisible
Market exchange is easier if denominations support a wide range of possible prices
Honey, paper money, coins

6. 7 D Q’s of Ideal $$$- cont Uniform Quality Low Opportunity Cost
If money is not of uniform quality, people will hoard the best and spend the rest, reducing the quality of money in circulation
Salt Bricks, Paper Money, Coins
Low Opportunity Cost
Fewer resources tied up in creating money, the more available for other use
Iron Coins, Paper Money
Stable Value
People are more willing to accept and hold money if they believe it will keep its value over time
Paper Money

7. 7 D Q’s of Ideal $$$- cont 2 Limited Supply
Anything that can be gathered or produced would not serve well as money
Gold, Silver
Bad Examples-
Strawberries, seafood, lead bars, potatoes, corn, cattle, diamonds, diamonds, , gold coins, diamonds and corn, farm crops, gold, leaves and rocks.

8. Federal Reserve System

9. Money Currency Checkable Deposits Traveler’s Checks Savings Deposits
Time Deposits
Money Market Mutual Fund Accounts
Debit Cards
Electronic Money