01:220:103 Lecture 6: Macro Assignment 6 Notes
Document Summary
Both parties must widely accept the money. Bartering is the practice of literally trading one good for another. Monetary policy focuses on money, banking, and interest rates. Fiscal policy is about government spending, taxes, borrowing. Money is what people regularly use when buying or selling things. Double coincidence of wants, is a situation where two people want some food that the other person can provide. Bartering system may keep small economies from growing. Another function is that it serves as a standard of deferred payment. Commodity money has a value other than money. Gold is a very good historical example. Commodity backed currency are currencies with values backed up by gold or other commodities held at a bank. Us has been backed by gold and silver in its history. As economies grew, countries moved towards fiat money. No intrinsic value, but it is declared by a government to be a country"s legal tender.
