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Money: Introduction

Money: Introduction. Xu Hu Texas A&M University. Currencies around the world !. Chinese Yuan. US dollar. Japanese Yen. British Pound. Indian Rupee. ??????. One observation of the use of “money”. An increase in the Brian ‘s checking account balance. Buy a Mac. Brian.

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Money: Introduction

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  1. Money:Introduction

    Xu Hu Texas A&M University
  2. Currencies around the world ! Chinese Yuan US dollar Japanese Yen British Pound Indian Rupee ??????
  3. One observation of the use of “money” An increase in the Brian ‘s checking account balance Buy a Mac Brian Withdraw some cash (green papers) from his checking account Some Buyer on the Internet Selling a used laptop on eBay Pay via deposit transfer
  4. What’s the nature of money? How money comes into the existence? (The origins of money) What kinds of function money plays?
  5. Farm Tools : Spade , Knife Shell Shang Dynasty 1766-1050 BC “Bu” and “ Dao” Chun Qiu, Zhan Guo 770 – 221 BC Coins made by silver “Jiao zi” Song Dynasty 960–1279 AD Coins made by copper
  6. Money: Functions medium of exchangewe use it to buy stuff store of valuetransfers purchasing power from the present to the future unit of accountthe common unit by which everyone measures prices and values
  7. Medium of Exchange Imagine a barter economy without medium of exchange, i.e., an economy in which there is no one commodity universally acceptable and people accept this commodity as payment not because they will “consume” the commodity and derive some utility from it but because they can use it to purchase something else. Brian beer corn fish Michael Justin
  8. Double Coincidence of Wants Brian Beer Coin Coin Corn Beer Fish Michael Justin Coin fish corn
  9. Wed Mon Tue Brian Justin Michael
  10. Bill of Exchange Mon Tue Wed Brian Redeem or (Repay) Justin Michael
  11. Store of Value This function can justify the use of precious metals as money. Some precious metal is used for saving, store of value, while it may NOT be used as a medium of exchange. Why use money to store the value? There are some other ways to save.
  12. Unit of account If some commodity is used as a unit of account, it does not have to enter the transaction. Brian Justin ? =
  13. Money: Types 1.fiat money (Legal Tender law) has no intrinsic value example: the paper currency we use 2.commodity money has intrinsic value examples: gold coins, cigarettes in P.O.W. camps
  14. Discussion Question Which of these are money? a.Cash b.Checks c.Deposits in checking accounts (“demand deposits”) d.Credit cards
  15. Fiat Money View money as a stock, i.e., asset. Why people will hold fiat money, since it does not yield interests?
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