Unit 4 – Money & Banking / Monetary Policy (3-26-16)

Ap Macroeconomics Unit 4 - Types and Functions of Money

Part 1

https://www.youtube.com/watch?v=YLsrkvHo_HA&feature=results_video&playnext=1&list=PL2CB281D126F65E26

Overview- 

Money has three types of how it is used for example through trading goods for another good, using notes that hold value (gold standard), or a currency that is backed by the government. They have also been based on how often it is used going from primitive to modern. Money also contains a separate functions which is determined by what it is used for the they are; money is a Medium of Exchange, a Store of Value, and a Unit of Account". These three functions are based upon the actions a user is doing for example if they buy an item they are using the "Medium of Exchange", if they save the money they are using "Storing of Value", and lastly if they decide to buy a brand name then they are using "Unit of Account".


Notes:(to self)
(3) Types of Money
-Commodity money: a trade of goods that hold value (trading)
-Representative money: paper money backed by valuable metals(notes that held a certain value)
-Fiat Money: money not backed by valuable metals (guaranteed to be worth something by the government)
(3) Functions of Money
-Money is a "Medium of Exchange": Purchasing something with money
-Money is a "Store of Value": Putting money into a savings account
-Money is a "Unit of Account": Price =Worth (Quality) -Ex:Brand name vs cheap