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Money Money Money!
One Step at a time to
to Success in
Economics
class!
Unit Five: Learning Objectives:
North Clackamas School District
Social Studies Priority Standards:
Econ 46. Distinguish between fiscal and
monetary policies and describe the role and
function of the Federal Reserve.
Lesson One: Daily Learning Target
I Can define and explain in writing the
following key Economic concepts:
The Three uses of Money
The Six Characteristics of Money
What Is Money?
Money is anything that is
generally acceptable that
serves as a medium of
exchange, a unit of account,
and a store of value.
Barter – goods and services were
traded without the exchange of money.
However, before trade could occur, there had to
be a “double coincidence of wants”. Each trader
had to have something the other wanted.
I’ll trade you a
chicken for a pair
of shoes.
I would love to sell you these
shoes but I can’t eat chicken,
due to my bad teeth, caused by
smoking.
In a barter economy a chicken
farmer who wants to buy shoes
may have to first trade chickens
for apples and then apples for
shoes because the guy selling
shoes wants only apples.
Money eliminates this problem.
You are lucky you are a
pineapple farmer and not a
broccoli farmer. I hate broccoli.
Or, a heart surgeon might accept only
certain goods (like pineapples
)
but not others (
like broccoli)
because he doesn’t like broccoli.
It is less expensive to use money.
The “calculation of exchange” is fast and easy
because whatever the price is, you pay that amount.
Here’s $3.00
for one gallon.
.
The “calculation of exchange” by bartering is
much slower than the “calculation of exchange”
in a monetary system.
• It is less expensive to use money.
• Using money saves time and time is money.
The monetary system enables the “calculation
of exchange” to go much faster.
• Money is also easier to tax.
• So a monetary system is better than a
barter system.
The Three Uses of Money:

Money as Medium of Exchange


Money as a Unit of Account


A medium of exchange is anything that is used
to determine value during the exchange of
goods and services.
A unit of account is a means for comparing the
values of goods and services.
Money as a Store of Value

A store of value is something that keeps its
value if it is stored rather than used.
The Six Characteristics
of Good Money:
The coins, paper bills, or anything used as money in a society is
called currency. A currency must meet the following
characteristics:
 Durability
 Uniformity
Objects used as money must
withstand physical wear and tear.
Any two units of money must be
uniform, that is, the same, in terms
of what they will buy.
 Portability
People need to be able to take
money with them as they go
about their business.
 Limited Supply
Money must be available only in
limited quantities.
 Divisibility
 `Acceptability
To be useful, money must be
easily divided into smaller
denominations, or units of value.
Everyone must be able to exchange
the money for goods and services.
The Sources of Money’s Value
Commodity Money
 Commodity money
consists of objects
that have value in
themselves.
Representative Money

Representative
money has value
because the holder
can exchange it for
something else of
value.
Flat Money:
“Flat money”, also
called “legal
tender,” has value
because the
government
decreed that is an
acceptable means
to pay debts.
Wayne Victor Dennis
Video Clip