1. Public Policy #11
Origins of Money

2. Quiz – Thursday!
If the gov decides to increase spending during an economic crisis, this is
Deficit spending B. Supply Side Economics
Trickle Down Theory D. All of the above
Why do some people believe that increasing spending during a recession will actually help the economy? Which party generally supports this?
Why do some believe that cutting taxes is the better answer? Which party generally supports this?

3. Trade me!

4. Barter
Vacation
Advantages
Disadvantages

5. Functions of Money Medium of Exchange: anything accepted for payment
Will you take gold for that?
Unit of Account: standard on which to base prices
3 ears of corn for a loaf of bread
Store of Value: retains purchasing power over time
Steak won’t last forever….

6. Characteristics of $ Durable: lasting Portable: easy to carry w/you
Divisible: divide into smaller units
Stability in value: value does not fluctuate much
Acceptable: ppl will accept the $ b/c they can use it elsewhere

7. Evolution of $ Commodity Money: both money & commodity = corn or gold
Representative Money: money that is backed by something valuable (gold)
Fiat Money: gov says $ has value
US $ today
Electronic Money: no longer tangible

8. Because of inflation, some people say you should invest in gold – since it always has value. What do you think – good idea?