ECN 204 Chapter 10: Chapter 10 - The Monetary System
Document Summary
Without money, trade would require barter; the exchange of one good or service for another. Every transaction would require a double coincidence of wants; the unlikely occurrence that two people each have a good the other wants. Simply means that two people have to want each other"s stuff. To ensure a double coincidence of wants you introduce $ Most people would have to spend time searching for others to trade with a huge waste of resources. This searching is unnecessary with money, the set of assets that people regularly use to buy g&s (goods and services) from other people. Example: i"m an economics professor, but i"m a consumer, too. Suppose i want to go out for a beer. Under a barter system, i would have to search for a bartender that was willing to give me a beer in exchange for a lecture on economics.
