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.
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