The functions of money Learning Objectives To understand

The functions of money Learning Objectives: • • • To understand money as a: Medium of exchange Measure of value A store of value A standard of deferred payment

Re-Cap Questions What's the difference between absolute and comparative advantage?

Re-Cap Questions What are the advantages of the division of labour? And disadvantages?

Re-Cap Questions Summarise why countries trade using as much content from last lesson as possible.

Re-Cap Questions Define Opportunity cost

MONEY AND ITS FUNCTIONS

Definition Function Classification

y e n o M f o n o i t i n i Def What is MONEY ? ? ?

y e n o M f o n o i t i n i Def any object accepted as means of exchange within a society

Function of Money a medium

Function of Money a medium a measure

Function of Money a medium a measure a standard

Function of Money a medium a measure a standard a store

“Money is the matter of functions four A Medium, a Mesure, a Standard, a Store. ” - William S. Jevon (1919)

Medium of Exchange People use money to exchange goods

Medium of Exchange Money makes transaction easier

Medium of Exchange Money removes the need for double coincidence of wants

Measure of Value Money measures values of goods and service in its unit of account.

Measure of Value “A unit of account is a standard numerical unit of measurement of the market value of goods, services, and other transactions. ”

e u l a V f o e Stor The value from consuming goods can be stored in several different ways, one of the best is money.

e u l a V f o e Stor If you don’t want to spend your money now, you can do it later.

e u l a V f o e Stor HOWEVER Inflation weakens the ability of storing value of money.

Standard of Deferred Payment Future payments for current purchases Buying now, paying later

Standard of Deferred Payment Inflation adjustment: interest rates

Watch Clip – then take quiz on mini whiteboard. http: //study. com/academy/lesson/the-fourbasic-functions-of-money. html#lesson

Task: Can you think of your own way to remember these for functions? “Money is the matter of functions four A Medium, a Mesure, a Standard, a Store. ” William S. Jevon Medium of exchange Measure of value A store of value A standard of deferred payment

TASK: READ PAGES ? ? OF YOUR TEXT BOOK AND COMPLETE THE ACTIVITY.