AOF Principles of Finance Unit 2 Lesson 4

Money is so common that we rarely think about what it is • Money

Money facilitates the direct exchange of goods and services • Before money was around,

Money enables us to easily trade goods and services • People use money when

Money is a way to hold wealth • Money is a store of value

Money is a standard unit of measurement • Money is a unit of account.

Money simplifies trade • If used appropriately, money can make life easier. • Money

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Money is so common that we rarely think about what it is • Money is any medium that is generally accepted as payment for goods and services. • Money is used to get the things we need and want. • The characteristics of money include: durability, divisibility, portability, and scarcity. What would it be like to live in a world without money?

Money facilitates the direct exchange of goods and services • Before money was around, people used to barter to obtain the goods and services that they needed. • People traded jewelry, shells, livestock, stones, tools, and much more. • Bartering wasn’t very efficient or convenient. • Bartering requires a “double coincidence of wants”—a rare occurrence. Describe a time when you bartered with someone for something that you wanted.

Money enables us to easily trade goods and services • People use money when any good or service is purchased. • Money ensures the successful exchange of one item for another. • Money serves as a way for people to get goods and services they do not produce with ease. How does using money as a medium of exchange simplify your life today?

Money is a way to hold wealth • Money is a store of value and can be used to store wealth. • You can store the value of the goods and services you produce. • You can save the value of what you make today to purchase items in the future. • Land, stocks, bonds, and jewelry are just some of the ways that people hold wealth. What are some of the advantages and disadvantages of storing wealth as stocks, bonds, and/or real estate?

Money is a standard unit of measurement • Money is a unit of account. • The price of all the other commodities are measured in terms of money. • Money allows you to compare goods and services by a common attribute. • Items become valued in terms of dollars or portions of a dollar.

Money simplifies trade • If used appropriately, money can make life easier. • Money serves a specific purpose in society. • Money is a necessity and is required for survival. • Money should be managed and used responsibly.