Lesson 1 Flashcards
is any item or commodity that is generally accepted as a means of payment for goods and services.
Money
is accepted as means of Repayment of debt.
Money
Money includes the funds stored as electronic entries in one’s checking account and savings account.
True or false?
True
is a periodical publication, which can either be printed or published electronically
magazine
is the oil that keeps the machinery of our world turning.
Money
It is the oldest form of payment to exchange of goods and services.
and was first observed around 10,000 – 3000 BCE
BARTER SYSTEM or BARTER
The barter observes the
‘IOU’ concept.
Characteristics of money:
MUST HAVE VALUE
MUST BE DURABLE
MUST BE PORTABLE
MUST BE UNIFORM
MUST BE LIMITED
MUST BE DIVISIBLE
MUST NOT BE PERISHABLE FOR PEOPLE TO STORE IT AS THEIR WEALTH IN THE FUTURE AND PEOPLE SHOULD BE ABLE TO USE IT ANYTIME, ANYWHERE.
CHARACTERISTICS AND KEY FUNCTIONS OF MONEY
STORE OF VALUE
CONTAINS AN INTRINSIC VALUE, SUCH AS THAT OF A PRECIOUS METAL THAT WAS USED TO MAKE A COIN. .
CHARACTERISTICS AND KEY FUNCTIONS OF MONEY
ITEM OF WORTH
MUST BE FREELY AND WIDELY USED FOR EXCHANGE OF GOODS AND SERVICES, AND THERE MUST BE STABILITY TO THE MONEY BEING USED.
CHARACTERISTICS AND KEY FUNCTIONS OF MONEY
MEANS OF EXCHANGE
MUST BE USED TO RECORD WEALTH POSSESSED, TRADE, OR SPENT PERSONALLY OR NATIONALLY. **must only be issued and recognized by one authorized **
CHARACTERISTICS AND KEY FUNCTIONS OF MONEY
UNIT OF ACCOUNT
MUST BE WIDELY ACCEPTED TO VALUE A DEBT THEREBY ALLOWING GOOD AND SERVICES TO BE ACQUIRED NOW AND PAID FOR IN THE FUTURE.
CHARACTERISTICS AND KEY FUNCTIONS OF MONEY
STANDARD OF DEFERRED PAYMENT
Insufficient money circulating in the economy will slow it down = Surplus of money circulating in the economy can cause inflation due to higher price levels
MONETARY THEORY
Monetary Theory formula?
MV= PQ
