C h 10
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C h 10. Money. Money- anything that serves as medium of exchange Medium of Exchange- anything that is used to determine value during and exchange of goods and services Barter- direct exchange of one set of goods or services for another.

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C h 10

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C h 10

Ch 10


Money

Money

  • Money- anything that serves as medium of exchange

  • Medium of Exchange- anything that is used to determine value during and exchange of goods and services

  • Barter- direct exchange of one set of goods or services for another.


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  • Unit of account- money provides the means for evaluating the value of goods or services

  • Store of Value- money keeps its value if you decide to hold on the money –or store- it instead of spending it.

  • Currency- coins or paper money


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  • Durability- money withstanding the physical wear and tear of being used over and over again

  • Portability- must be able to take it with you

  • Divisibility- must be easily divided into smaller denominations

  • Uniformity- Any two units of money must be uniformed in terms of what they will buy


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  • Limited supply-Federal Reserve System Controls the supply of money in circulation

  • Acceptability- Everyone must accept the value of the money and exchange it


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  • Commodity Money- An object that has value in and of themselves and that are also used as money. EX salt, cattle, precious stones

  • Representative Money- makes use of objects that have value because the holder can exchange them for something else of value

  • Fiat Money- “legal tender” has value because the government has decreed that it is an acceptable means to pay a debt


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  • 1791 First Bank of the United States.

    • To have a central location to deposit taxes collected by the Federal Govt.

    • Help Federal Govt Borrow money on Publics behalf

    • Issue Representative Money

    • The ensure state charted banks held sufficient gold and silver on reserve to exchange for bank notes should that be necessary


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  • 1791- 1st bank charter for 20 years

  • 1811 Charter Ran out. Not reinstated

  • 1816 – 2nd Bank of the United States was chartered.

    +Bank Panic of 1837-

    Wildcat Banks- on edge of frontier

    Fraud

    Different Currencies


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  • Greenbacks-

    • 1861 Both North and South during Civil war needed a portable currency. United States treasury issued the first paper money since the Continental called GREENBACKS bc they were printed in green ink. They were also known as “ demand notes”

    • The south issued Confederate Money backed by Cotton.


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