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16 Cards in this Set
- Front
- Back
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What is Money?
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Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
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What is Wealth?
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The total collection of pieces of property that serve to store value
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What is Income?
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The flow of earnings per unit of time
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What are the 3 functions of money?
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1. A medium of exchange
2. A unit of account 3. A store of value |
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Why is money a universally preferred store of value?
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Liquidity - the relative ease and speed which an asset can be converted into a medium of exchange.
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Why is money such an efficient medium of exchange?
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It minimizes the time spent on exchanging goods and services.
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What is the primary disadvantage of money as a store of value?
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Deflation - it gradually loses its value over time. However, in advanced economies, it does so predictably and in a controlled manner.
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What is the double coincidence of wants?
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In order for a successful barter transaction, you need to find someone who has what you need that will trade it for something you have.
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How many distinct prices would exist in a barter economy with n goods?
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[n x (n-1)]/2
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What is liquidity?
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The relative ease and speed which an asset can be converted into a medium of exchange.
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What is commodity money?
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Money whose value comes from the commodity from which it is derived such as a gold coin.
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What is fiat money?
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Money whose value comes from government decree. The value is based on legal statue and confidence in the government's ability to honour it.
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What is seigniorage?
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The practice of decreasing the commodity value of money while maintaining the face value. The issuer would then pocket the difference.
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What is a cheque?
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An instrument that directs one financial institution to transfer money from one account to another.
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What percentage of money in the Canadian economy is made up of paper currency?
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4%-5% depending on your source
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What is scriptural money?
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Electronic money / ledgers stored in banks. 95% of all money in the Cdn economy.
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