EC140 Chapter Notes - Chapter 24: Opportunity Cost, Loanable Funds, Money Multiplier

• School: WLU
• Department: Economics
• Course: EC140
• Professor: Jerzy Konieczny

Document Summary

Any commodity or token that is generally acceptable as a means of payment. Means of payment: a method of settling a debt. Money serves three functions: medium of exchange, unit of account, store of value. Any object that is generally accepted in exchange for goods and services. Without a medium of exchange and exchange called a barter ensues. Barter: requires a double coincidence of wants (rarely occurs) An agreed measure for starting the prices of goods and services. Prices are a good gage to see the relative value of a good to make a comparison. Money is a store of value in the sense that it can be held and exchanged later for goods and services. If money was not a store of value, it could not serve as a means of payment. To make money as useful as possible as a store of value, a low inflation rate is needed.