Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Thomson/South-Western 2006
Acceptance is contingent on confidence that it will retain its value or purchasing power.
Confidence in moneys value relies on it being sufficiently scarce that its value does not diminish over time.
2
Historical Money
Practically all payments are made by the exchange of currency or by the transfer of deposit balances via checks or electronic (wire) transfer.
4
Legal Tender
Legal tender
cannot lawfully be refused in payment for goods and services and for discharge of debts. no merchant or creditor can demand payment in another form. Only Currency and coins are legal tender.
Checking accounts are not legal tender. Many items have served as money without having legal tender status.
Credit cards do not influence the supply of money, but do reduce the demand for money.
People have ______ if they have large amounts of currency or big bank accounts at a point in time. (stock variable) Someone earns ______ from work or investments over a period of time. (flow variable) People have ______ if they have assets > debts at a point in time. (stock variable)
7
3 Functions of Money
Money serves as a
1. medium of exchange or means of payment 2. standard of value or unit of account 3. store of value
1. Medium of Exchange
A barter economy is one in which goods and services are traded directly for one another.
In barter economy, people must find producers of what they want who also want what they have to trade. This double coincidence of wants is socially inefficient, and the introduction of money eliminates this problem.
In a money economy, people use money to sell their goods or services for money and buy what they want with money.
9
10
3. Store of Value
Money acts as a temporary storage of purchasing power. In a barter economy, the purchase of any item implies a simultaneous sale of another item. In a money economy, people can sell something (e.g. their labor) without buying something simultaneously. Money is not the only store of value. Money is not a perfect store of value.
11
Liquidity
The relative ease with which an asset can be converted into money (i.e., liquidated) without significant commissions, other charges, inconvenience and risk of principal
12
Liquidity (2)
We store purchasing power as money rather than as something else because converting it back into money can be costly. An asset is liquid if it can be easily converted into money and illiquid if it is costly to convert.
Cash is perfectly liquid. Stocks and bonds are somewhat less liquid. Land is illiquid.
13
14
Evolutions of Money
1. Full-bodied or Commodity Money
4. Checking Accounts
5. Electronic Money
15
16
17
18
19
Form of money that derives its value by fiat or government decree rather than through its value as a commodity
20
Advantages
Fewer resources are used to produce money.
The quantity of money in circulation can be determined by rational human judgment rather than by discovering further mineral deposits like gold or diamonds.
Disadvantage:
A corrupt or pressured government might issue excessive amounts of money, Causing inflation.
21
4. Checking Accounts
Advantages:
People are not forced to carry around large amounts of paper currency. You can pay bills without worrying about the cash being stolen in transit. Accounts are insured up to $100,000. Checks provide records for accounting & tax purposes
Disadvantages
Check clearing costs $5 billion per year. Checks must clearintroducing float costs.
22
5. Electronic Money
Innovations in data processing, information retrieval, and communications systems make electronic money systems possible. Advantages Efficiency
Reduced cost of processing checks Reduced costs from billing credit cards Employers can reduce their payroll costs by paying with direct deposit. People can reduce their costs by paying bills electronically
23
24
Debit cards
A card with which an individual pays for an item by transferring funds electronically and immediately from his / her bank account to the merchants bank account
25
Stored-value cards
26
Electronic cash
E-cash Form of money that facilitates payment for items purchased over the Internet An individual sets up a bank account in which the bank transfers e-cash to the individuals personal computer via the Internet
27
Electronic checks
Similar to regular checks except that the process is electronic, circumventing the costly procedure of physically processing and transporting checks.
Lower cost relative to traditional paper checks
28
29
30
M1, M2 and M3
M1 = Currency + Demand Deposits + Travelers Checks + Other Checkable Accounts
M2 = M1 + Savings Accounts + Money Market Deposit Accounts (MMDA) + Small (<$100K) Time Deposits + Money Market Mutual Fund Shares (held by individuals)
M3 = M2 + Large (>$100K) Time Deposits + Repurchase Agreements + Money Market Mutual Fund Shares (held by institutions)
31