ECON 105 Chapter Notes - Chapter 27: Fiat Money, Commercial Bank, Demand Deposit

• School: Simon Fraser University
• Department: Economics
• Course: ECON 105
• Professor: Seong- Jun Choi

Document Summary

Generally accepted medium of exchange: anything that is generally accepted in return for goods and services sold. Acts as a store of value and a unit of account. Money supply is measured by using different definitions for different purposes. If there were no money, goods would be exchanged by barter: a system in which goods and services are traded directly for other goods and services. Hard to trade in a barter economy because not everything has an equal value: ex. Barber can only exchange with haircuts: money makes it easy for people who specialize. The double coincidence of wants is unnecessary when a medium of exchange is used. It must have a number of characteristics: must be easily recognizable, readily acceptable, high value relative to its weight, divisible large & small denominations, durable, difficult to counterfeit. Convenient means of storing purchasing power: goods are sold today, and money can be stored until needed.