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Understanding Money

Understanding Money. Daniel Folkinshteyn, PhD http://finance-lectures.com/ personal@finance-lectures.com. Learning objectives. Explain the function of money in the economy Briefly describe the history of money, progressing from early forms of exchange to representative money

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Understanding Money

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  1. Money 101 | finance-lectures.com Understanding Money Daniel Folkinshteyn, PhD http://finance-lectures.com/ personal@finance-lectures.com

  2. Money 101 | finance-lectures.com Learning objectives • Explain the function of money in the economy • Briefly describe the history of money, progressing from early forms of exchange to representative money • List the major desirable properties of money

  3. Money 101 | finance-lectures.com Before money "barter"

  4. Money 101 | finance-lectures.com Quiz 1 Imagine there's no such thing as money. If your asset is a goat, and you want to acquire a cellphone, what problems might you encounter in your quest?

  5. Money 101 | finance-lectures.com Coincidence of wants

  6. Money 101 | finance-lectures.com Coincidence of wants

  7. Money 101 | finance-lectures.com Emergence of money Commodity money Representative money

  8. Money 101 | finance-lectures.com Use of money Money: medium of exchange

  9. Money 101 | finance-lectures.com What is money • Unit of account • Store of value

  10. Money 101 | finance-lectures.com Quiz 2 List some desirable properties for money to have.

  11. Money 101 | finance-lectures.com Desirable properties of money • Durability • Divisibility • Portability • Fungibility (uniformity) • Scarcity • Recognizability • Value density

  12. Money 101 | finance-lectures.com Quiz 3 One interesting form of money Rai stones, used on the island of Yap in Micronesia, is made of large stone disks. The photo on the right is of one such disk, which is about 8 feet in diameter. What characteristics of money are missing from Rai stones? How about cattle?

  13. Money 101 | finance-lectures.com Missing features Rai: • Portability • Divisibility • Fungibility Cattle: • Divisibility • Fungibility Moo.

  14. Money 101 | finance-lectures.com Additional reading Coined: The Rich Life of Money and How Its History Has Shaped Us by Kabir Sehgal

  15. Money 101 | finance-lectures.com Attributions • All images, unless otherwise noted, are sourced from pixabay.com or Wikimedia Commons, and are licensed under CC0, public domain. • Image of early Greek coin, sourced from Wikimedia Commons, by Classical Numismatic Group, CC-BY-SA 3.0. • Image of Rai stone, sourced from Wikimedia Commons, by Eric Guinther, CC-BY-SA 3.0.

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