1. Money Properties and Functions
Unit 10.1

2. What is it Worth?
What is something worth? What is value? If everyone does not value something the same, does it really have worth?

3. Uses of Money Medium of exchange Unit of account Store of value
Without money, we have to barter for goods
Unit of account
We can use it to compare goods
Store of value
Keeps it’s “value” over time

4. Characteristics of Money
Durability - Lasts a while
Portability - Easy to carry
Divisibility pennies to the dollar
Uniformity - All $1 are worth the same
Limited Supply - Amount in circulation
Acceptability - Everyone accepts the face value

5. Types of Money
Commodity Money – Difficult to use as money. Salt used to be used to pay Roman Legionaries
Representative Money – Based on the value of a certain commodity, like gold or silver. Limited to the amount the bank/government has
Fiat Money – Because we say so

6. Money in the U.S. Currency Demand Deposits
Savings and Long Term Deposits
CDs
Bonds
Retirement Accounts

7. Money Supply Sept. 2014 M1: Cash 2,855.4 B
M2: Savings and short term deposits 11,474.1 B
M3: Long Term Deposits