1 / 6

AP Economics

Explore the definition and functions of money, its roles in the economy, and how its amount is measured. Learn about types of money like commodity and fiat, and grasp monetary aggregates such as M1 and M2.

warner
Download Presentation

AP Economics

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. AP Economics Mr. Bernstein Module 23: The Definition and Measurement of Money February 27, 2014

  2. AP EconomicsMr. Bernstein The Definition and Measurement of Money • Objectives - Understand each of the following: • The definition and functions of money • The various roles money plays and the many forms it takes in the economy • How the amount of money in the economy is measured

  3. AP EconomicsMr. Bernstein Roles of Money • Definition: Money is anything that is easily exchangeable for goods and services • Money is NOT the same thing as wealth • Medium of Exchange • Eliminates difficulties of barter system • Store of Value • Does not decay (other than inflation) • Measure of the relative worth of goods and services

  4. AP EconomicsMr. Bernstein Types of Money • Commodity • ie gold or silver, often has other intrinsic uses • Commodity-backed money • No intrinsic value but has promise of ability to be converted into commodity with value

  5. AP EconomicsMr. Bernstein Types of Money, cont. • Fiat money • Value derives entirely from its official status as medium of exchange • “This note is legal tender for all debts, public and private.”

  6. AP EconomicsMr. Bernstein Measuring the Money Supply • Monetary Aggregates • M1 = Currency and coin in circulation + checking deposits + traveler’s checks • M2 includes “near monies” easily exchangeable into cash and paying interest • M2 = M1 + savings accounts + short term CDs + money market accounts

More Related