ECN 204 Lecture Notes - Money Supply, Overnight Rate, Openmarket
22 Apr 2012
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Document Summary
Transactions would require a double coincidence of wants the unlikely occurrence that two people each have a good the other wants. People would have to spend time searching for others to trade with waste of resources. This searching is unnecessary with money, the set of assets that people regularly use to buy g&s from other people. Medium of exchange: an item buyers give to sellers when they want to purchase g&s. Unit of account: the yardstick people use to post prices and record debts. Store of value: an item people can use in the future if not used today. The 2 kinds of money: fiat money: money without intrinsic value, used as money because of government decree example: the canadian dollar, commodity money: takes the form of a commodity with intrinsic value. The money supply (or money stock): the quantity of money available in the economy. Currency: the paper bills and coins in the hands of the general public.
