2. Money Lecture 6.6

3. Money Money- anything people commonly accept in exchange for goods and services

4. Functions of Money 1. Medium of exchange- must be accepted in exchange for goods and services 2. Measure of value - compare the value or worth of different items through prices. 3. Store of value - non perishable; can be saved and keep its value over time and even accumulate wealth

5. Characteristics of Money 1. Stable – money should be scarce to maintain it’s value over time 2. Portable: be able to carry it around 3. Divisible: easily separated into parts 4. Durable: it must last

6. Sources of Money’s Value 2. Representative - represents value held elsewhere (ex. checks) 3. Fiat "let it be done". - money has value simply because the government says it does. (ex. Our currency) 1.Commodity - item has value of its own. (ex. Gold, diamonds, salt)