Today In Class • You will need a Econ book during class. • Finish test corrections (10 minutes) • Unit 3 Vocabulary – Due November 3 – Quiz & Flash cards • Notes – What is Money (20 Minutes)
Jan 17, 2016
Today In Class
• You will need a Econ book during class.
• Finish test corrections (10 minutes)
• Unit 3 Vocabulary – Due November 3 – Quiz & Flash cards
• Notes – What is Money (20 Minutes)
Money
In this lesson, students will be able to identify characteristics of money.
Students will be able to identify and/or define the following terms:
Money
Commodity Money
Representative Money
Fiat Money
We use it every day but what is money?
Money
• Money is a medium of exchange, a unit of account, and a store of value.
• As a medium of exchange, money measures value during the exchange of goods and services.
• What is the value of a sweater?
When we purchase a sweater, we usemoney as a medium of exchange.
Money, Again
• As a unit of account, money is a way to compare the value of goods and services.
• A more expensive sweater is considered more valuable than a cheaper sweater.
• Finally, money is a store of value. Money holds its value even if it is not used though inflation affects money.
An expensive price tag tells us somethingabout the good’s value.
And if we don’t spend it today, that’sO.K., too. Money is a store of value. Itkeeps its value unless inflation occurs.
But I don’t haveto tell you aboutinflation. Youknow all aboutrising prices.You’ve been
to the gasstation.
Not All Money is the Same
• Commodity money can be used as money but also has value in itself.
• An example of commodity money is salt. Salt was once used in some societies as money.
• Salt could be used as money or eaten.
Long ago, in somesocieties, salt wasused as money.
Salt is an exampleof commodity
money. Salt canbe used as money
or eaten.
Representative Money
• Representative money is another type of money.
• An example of representative money is an I.O.U.
• The paper that the I.O.U. is written on can be exchanged for something valuable.
Our dollarswere oncebacked bygold. You
could exchange a
dollar for gold.
Fiat Money
• Fiat money is our money today.
• Our money is money because the government states that it is an acceptable means to pay debts.
• In other words, its money because the government says so.
Its moneybecause
the governmentsays so. Itsfiat money.
Six Characteristics of Money
• Do we use pigs as money or paper as money? How does a society decide?
• There are six characteristics of good money. Money should be portable, divisible, durable, uniform, accepted, and have a limited supply.
• Too much money in circulation means less value.
Questions for Reflection:
• What is money?
• Explain each of the three functions of money.
• Provide an example of commodity money.
• What is representative money?
• How does fiat money differ from commodity money and representative money?