Transcript Money Part 2 - Etna FFA Agriculture

Money Part 2
Personal Finance
Mr. Hargett
2013-14
Pre Money
 Hunter Gathering Societies
 Self Providing
 Agrarian Societies
 Self Providing
 Next Step?
 Barter System- Exchange of goods or services
Function of Money
 A medium of exchange
 The Most important function
 A unit of account
 A store of value
Commodity Money
 Example
 Corn
 ????
7 Desirable Qualities of Ideal $$$
 Durable
 Money should not wear out quickly
 Paper money, coins, sea shells
 Portable
 Money should be easy to carry, even large sums
 Diamonds, paper money
 Divisible
 Market exchange is easier if denominations support a wide
range of possible prices
 Honey, paper money, coins
7 D Q’s of Ideal $$$- cont
 Uniform Quality
 If money is not of uniform quality, people will hoard the best
and spend the rest, reducing the quality of money in circulation
 Salt Bricks, Paper Money, Coins
 Low Opportunity Cost
 Fewer resources tied up in creating money, the more available
for other use
 Iron Coins, Paper Money
 Stable Value
 People are more willing to accept and hold money if they
believe it will keep its value over time
 Paper Money
7 D Q’s of Ideal $$$- cont 2
 Limited Supply
 Anything that can be gathered or produced would not serve
well as money
 Gold, Silver
Bad ExamplesStrawberries, seafood, lead bars, potatoes, corn, cattle, diamonds,
diamonds, , gold coins, diamonds and corn, farm crops, gold, leaves and
rocks.
Federal Reserve System
Money
 Currency
 Checkable Deposits
 Traveler’s Checks
 Savings Deposits
 Time Deposits
 Money Market Mutual Fund Accounts
 Debit Cards
 Electronic Money