1. Standard SSEMI1b- Explain the role of money as a medium of exchange
Notes- Role of Money
Standard
SSEMI1b- Explain the role of money as a medium of exchange

2. What is money?
Money is any substance that serves as a medium of exchange, store of value, or measure of value.
It must also be accepted by everyone in a society.
We use fiat money- money issued by government decree.

3. Roles of Money Money Measure of Value Medium of Exchange
Store of Value

4. Roles of Money
Medium of Exchange: An item that can be traded for another good or service.
Measure of Value: a common denominator that can be used to express worth
Store of Value: allows purchasing power to be used over time

5. Characteristics of money
To be a successful medium of exchange money must be portable, durable, divisible, and limited in supply.
Successful Money

6. Characteristics of money
Easily transferred from one person to another
Portability
Does not deteriorate when handled often
Durability
Easily split up into smaller or larger denominations
Divisibility
Money loses value whenever there is too much
Limited Availability

7. Role of money Money advances the exchange of goods and services.
People directly get what they need instead of waiting to barter.

8. Role of Buyers Consumers want products at the cheapest possible price.
Consumers decide how much of a certain good they are willing to buy based on price.

9. Role of Sellers Sellers want to make as much as possible.
Producers must be convinced that their product will make money before they produce it.

10. What is price?
Price is the monetary value of a product as established by supply and demand
High prices producers produce more buyers buy less
Low prices producers produce less buyers buy more

11. How do prices help us?
Prices are a link between producers and consumers
Prices allow the economy to run smoothly
This helps us decide how we are allocating scarce resources

12. Prices Help Us Prices don’t favor consumer or producer
They are flexible which helps the market accommodate change
No one has to worry about deciding on a price