medium of exchange; unit of account; store of value
the three uses of money
barter
the direct exchange of one set of goods and services for another
medium of exchange
anything that is used to determine value during the exchange of goods and services
unit of account
a means for comparing the values of goods and services
store of value
money keeps its value if you decide to store it instead of spending it
inflation
when does money not serve as a good store of value?
currency
coins and paper bills used as money
portability; acceptability; limited supply; durability; uniformity; divisibility
the six characteristics that economists use to judge how well an item serves as currency (remember: PALDUD)
durability
objects used as money must withstand the physical wear and tear that comes with being used over and over agian
portability
people need to be able to carry money with them and be able to easily transfer it from one person to another when making purchases
divisibility
money must be easily divided into smaller denominations, or units of value
uniformity
people must be able to count and measure money accurately
limited supply
to be useful and maintain its value, the right amount of money must be available
acceptability
everyone in an economy must be able to exchange the objects that serve as money for goods and services
commodity; representative; fiat
the three sources of money's value
commodity money
consists of objects that have value in and of themselves and that are also used as money
representative money
money that makes use of objects that have value because the holder can exchange them for something else of value
fiat money
money has value because the government has decreed that it is an acceptable means to pay debts
fiat money
what type of money is US money?
money
anything that serves as a medium of exchange, a unit of account, and a store of value
medium of exchange; unit of account; store of value
the three uses of money
barter
the direct exchange of one set of goods and services for another
medium of exchange
anything that is used to determine value during the exchange of goods and services
unit of account
a means for comparing the values of goods and services
store of value
money keeps its value if you decide to store it instead of spending it
inflation
when does money not serve as a good store of value?
currency
coins and paper bills used as money
portability; acceptability; limited supply; durability; uniformity; divisibility
the six characteristics that economists use to judge how well an item serves as currency (remember: PALDUD)
durability
objects used as money must withstand the physical wear and tear that comes with being used over and over agian
portability
people need to be able to carry money with them and be able to easily transfer it from one person to another when making purchases
divisibility
money must be easily divided into smaller denominations, or units of value
uniformity
people must be able to count and measure money accurately
limited supply
to be useful and maintain its value, the right amount of money must be available
acceptability
everyone in an economy must be able to exchange the objects that serve as money for goods and services
commodity; representative; fiat
the three sources of money's value
commodity money
consists of objects that have value in and of themselves and that are also used as money
representative money
money that makes use of objects that have value because the holder can exchange them for something else of value
fiat money
money has value because the government has decreed that it is an acceptable means to pay debts
fiat money
what type of money is US money?
money
anything that serves as a medium of exchange, a unit of account, and a store of value