Unit 2:
Microeconomics
Supply and Demand
1
Money!!!
Who is on the…
1. $100 Bill
2. $50 Bill
3. $20 Bill
4. $10 Bill
5. $5 Bill
6. $2 Bill
7. 50 Cent
8. Dime
9. $1000 Bill
10.$100,000 Bill
1. Franklin
2. Grant
3. Jackson
4. Hamilton
5. Lincoln
6. Jefferson
7. JFK
8. FDR
9. Cleveland
10. Wilson
Bonus:
“E Pluribus Unum”
means….
“Out of Many, One”
2
Why do we use money?
What would happen if we didn’t have money?
The Barter System: goods and services are
traded directly. There is no money
exchanged.
Problems:
1. Before trade could occur, each trader had to have
something the other wanted.
2. Some goods cannot be split. If 1 goat is worth five
chickens, how do you exchange if you only want 1
chicken?
Example: A heart surgeon might accept only certain
goods but not others because he doesn’t like broccoli.
To get the surgery, a pineapple grower must find a broccoli
farmer that likes pineapples.
3
Functions of Money
• Money is anything that people
commonly accept in exchange
for goods and services.
• Money was developed because
of the difficulties in bartering.
Functions of Money
• In the USA money has 3 basic
functions:
1. Medium of Exchange- Any item that a
seller accepts as payment for goods and services.
2. Standard of value- Provides people with a
way to measure the relative value of goods and services.
3. Store of valuesaved for a later date.
Money can be stored or
Characteristics of Money
To be used as money, an item must have
certain characteristics; the 5 major
characteristics of money are:
1. Durability
Refers to money’s ability
to be used over and over.
2. Portability
Money’s ability to be
easily carried;
and transferred from
person to person.
Characteristics of Money
3. Divisibility
Refers to money’s ability
to be divided into smaller
units.
4. Stability in Value
Value of money must
remain reliable.
5. Acceptability
People are willing to
accept money in
exchange for goods and
services.
SOURCES OF MONEY VALUE
• Economist have identified 3
sources of value for money, which
is how it is identified:
1. Commodity Money- Money that has a value of
its own. (Gold, Silver, Cigarettes)
2. Representative Money- Money that has value
because it can be exchanged for something of value.
(Gold Standard)
3. Fiat Money- Money has value because the
government has issued a fiat or decree saying so.(Paper
money, coins)
FORMS OF MONEY
• The United States relies
primarily on fiat Money. In
America this type of money
comes in 3 forms:
1. Coins and Paper Money
2. Demand Deposits- (Checks)
3. Near Money- (Savings accounts, time deposits)
NOW ITS YOUR TURN
The United States has been devastated by an alien attack. All that
remains is a small remnant of citizens located in central Georgia,
including Spalding County. During the destructive raid by the alien
race, the American money system was destroyed. With no United
States and no money, your group has been assigned the task of
creating a new money for the survivors.
Your new money cannot be paper money or coins. However,
remember that your money must support the five characteristics of
money discussed in class.
Additionally, you must state what form of money you have created
and what its source of value is.
Finally , name your money and create a sign that includes the name
and a visual representation of your money. This sign will also detail
how your money fulfills the 5 characteristics of money and what its
source of value is.