1. Intro to Money & Monetary Policy AP Macroeconomics http://en.wikipedia.org/wiki/File:Stacks_of_money.jpg

2. Where we came from… In Unit 3, we discussed Keynesian economics, the relationship between price level and output with aggregate demand and aggregate supply; and then we reconciled Keynes’s model with the AD &AS model, as well as LRAS with the PPC. We ended with a talk about fiscal policy. Oh, and let’s not forget that wonderful MULTIPLIER! Visual 3.13, Unit 3 Macroeconomics, National Council on Economic Education, http://apeconomics.ncee.net

3. Where are we going?  In this Unit, we’ll learn about the role of money in the economy, and how the money supply is influenced by the central bank and banking system via monetary policy.  First, we need to learn about certain aspects of money. http://www.writemoneyinc.com/

4. Money makes the world go ‘round… Money has been around for a long time. A wide range of commodities have served as money in different countries at different times. Prior to money, economies used the barter system. Problem with the barter system? Something called: double coincidence of wants.  That is, you must find someone who wants what you’re willing to trade, and has what you want in exchange! http://williamstake.wordpress.com/2012/09/12/why-doesnt-america-just-use-the-barter-system-again/

5. Money makes the world go ‘round… There are three things we need to explore: 1) Properties of money 2) Functions of money 3) Definitions of money http://www.languageguide.org/images/im/tools.png

6. Properties of money Portability – you can take it easily from place to place Uniformity – it is consistent Durability – will (hopefully) last Stability in value – value holds fairly stable over time (i.e. doesn’t change constantly) Stability in acceptability – people and economies accept its value fairly consistently over time

7. Commodities that have served as money… Cigarettes & chocolate bars in prisoner of war camps Cattle Seashells Which properties does each of these possess? Which do they not possess?

8. http://www.travel-images.com/photo-russia539.html

9. Functions of mula, I mean money… Medium-of-exchange function: money is an asset that individuals use to trade for goods and services rather than to consume (i.e. money – you don’t eat it [hopefully], you trade it for things you eat). This eliminates the need for the double coincidence of wants. http://filipspagnoli.wordpress.com/2008/09/01/human-rights-quote-87-trade-liberalization-and- poverty/

10. Functions of mula, I mean money, ct’d… Store-of-value function: permits money to be held for use at some later time. Money holds purchasing power over time. It must, otherwise it would be of value today and worth nothing tomorrow! http://www.bulletpoints.co.nz/is-it-a-trend-or-is-it-a-megatrend/

11. Functions of mula, I mean money, ct’d… Unit-of-account function: this is also known as the “standard of value” function. This means there is an agreed-to measure for stating the prices of goods and services, and it also simplifies price comparisons.  Allows us to set prices and make economic calculations. http://en.wikipedia.org/wiki/Measurement This, in other words, means there is a commonly accepted measure. The logic behind the gold- standard…

12. And now… Some resources: http://www.reffonomics.com/ Morton workbook Activity 34

13. Works Cited Economics of Seinfeld. http://yadayadayadaecon.com/clip/46/ http://yadayadayadaecon.com/clip/46/ Krugman, Paul, and Robin Wells. Krugman’s Economics for AP. New York: Worth Publishers. Morton, John S. and Rae Jean B. Goodman. Advanced Placement Economics: Teacher Resource Manual. 3 rd ed. New York: National Council on Economic Education, 2003. Print. Reffonomics. www.reffonomics.com.www.reffonomics.com