Unit 4 March 20

• The Barter System- Goods and services are traded directly. There is no money exchanged
• Money- anything that is generally accepted in payment for goods and services 
• not the same as wealth or income 
• wealth- the total collection of assets that store value 
• Income- a flow of earnings per unit or time 
• 3 things money can be used as
• Medium of  Exchange 
• determines value 
• Unit of account 
• Comparing cost of price
• Store of Value
• how well does me money hold
• 3 types of money
• Representative
• Represents something of value
• IOU's
• Commodity
• It has value within itself
• salt gold
• Fiat
• It is money because the government says so
• paper money, coins
• Characteristic of money 
• Durability- money is durable
• Probability- you can carry it any where
• Uniformity
• Divisibility- able to be divided
• Limited supply 
• Acceptability
• liquidity- easy to convert to cash
• 3 types of money 
• M1( high liquidity )- Coins, Currency, and Checkable deposits 
• M2 ( Medium liquidity )- M1 plus savings deposits, time deposits, and mutual funds below $100K
• M3( Low liquidity )- M2 plus time deposits above $100K