Money, Money, Money.MONEY! Chapter 11 not bankruptcy, in your book goofball! Chapter 11 not bankruptcy, in your book goofball! Vocabulary Barter economy Barter economy Mutual Coincidence of Wants Mutual Coincidence of Wants Money Money Medium of Exchange Medium of Exchange Measure of Value Measure of Value Store of Value Store of Value Commodity Money Commodity Money Fiat Money Fiat Money Specie Specie Monetary Unit* Monetary Unit* In the beginning 90 of these 90 of these Were traded for a hundred pound barrel of this. Were traded for a hundred pound barrel of this. Virginia 1620* Barter Relies on trade. Relies on trade. Theres a problem though. Theres a problem though. Lets show it by playing a game.* Lets show it by playing a game.* The Groups 1. Blacksmith 1. Blacksmith 2. Cattle Rancher 2. Cattle Rancher 3. Corn Farmer 3. Corn Farmer 4. Lumberjack 4. Lumberjack 5. Shoemaker* 5. Shoemaker* Trade Rules Axes can be traded for Hides or Corn. Axes can be traded for Hides or Corn. Hides can be traded for Axes or Wood Hides can be traded for Axes or Wood Corn can be traded for Axes or Shoes Corn can be traded for Axes or Shoes Wood can be traded for Hides or Shoes Wood can be traded for Hides or Shoes Shoes can be traded for Corn or Wood* Shoes can be traded for Corn or Wood* Ok, Debrief Were you successful? Were you successful? What was the major problem? What was the major problem? What would happen if we added in different values for each trade item?* What would happen if we added in different values for each trade item?* 3 Functions of Money 1. Medium of exchange Must be accepted by all parties as payment for goods & services.* 1. Medium of exchange Must be accepted by all parties as payment for goods & services.* 3 Functions of Money 2. Measure of Value 2. Measure of Value Accepted as the common denominator used to express worth. Accepted as the common denominator used to express worth. Allows us to make comparisons with other products.* Allows us to make comparisons with other products.* 3 Functions of Money 3. Store of Value 3. Store of Value Allows us to save the purchasing power until needed.* Allows us to save the purchasing power until needed.* Types of Money Commodity money has another use besides money. Commodity money has another use besides money. Agreed upon by the people exchanging.* Agreed upon by the people exchanging.* Tea Brick - China Compressed Cheese - Russia Barley - USA Tobacco - USA Fiat Money Issued by government decree (fiat.)* Issued by government decree (fiat.)* Paper Currency Originally US state laws allowed individuals & banks to issue their own paper money provided it was backed up by gold & silver. Originally US state laws allowed individuals & banks to issue their own paper money provided it was backed up by gold & silver. Continental dollars however werent backed up by anything and were eventually worthless. Continental dollars however werent backed up by anything and were eventually worthless. Billion printed by 1783* Billion printed by 1783* Specie Coins made from gold or silver.* Coins made from gold or silver.* The Almighty Thaler 2 bits, 2 bits, 4 bits 4 bits 6 bits, 6 bits, A peso! A peso! All for the Thaler All for the Thaler Stand up and say so!* Stand up and say so!* Gotcha! Colonial Americans preferred specie to paper money because it was always useful and accepted in trade. Colonial Americans preferred specie to paper money because it was always useful and accepted in trade. Most specie in colonies were from Spanish Peso. Most specie in colonies were from Spanish Peso. The old Spanish Doubloons, or pieces of 8 were the same size as Austrians Thalers.* The old Spanish Doubloons, or pieces of 8 were the same size as Austrians Thalers.* No pieces of 8 for the USA Ben Franklin and Alexander Hamilton set the US Currency up on 10ths. Ben Franklin and Alexander Hamilton set the US Currency up on 10ths. Eagles $10Eagles $10 Half Eagles $5Half Eagles $5 Quarter Eagles $2.50Quarter Eagles $2.50 Dollars or Units $1Dollars or Units $1 Half Dollars $0.50Half Dollars $0.50 Quarter Dollars $0.25Quarter Dollars $0.25 Dismes $0.10Dismes $0.10 Half Dismes $0.05Half Dismes $0.05 Cents $0.01Cents $0.01 Half Cents $0.005*Half Cents $0.005* Characteristics of Money Portability Portability Durability Durability Divisibility Divisibility Limited Availability* Limited Availability* Quiz Time!