Money and Trade
Functions of MoneyHas three functions:
1. Medium of exchange.
2. Store of value. 3. Measure of value.
Types of MoneyAnything people are willing to exchange for goods
can be considered money. Most common types of money today:
Coins = metallic forms of money.Currency = coins and paper money.Checking AccountsSavings Accounts
Financial InstitutionsCommercial BanksSavings and Loan Associations (S&Ls)Credit Unions
Protecting the Financial SystemFederal Deposits Insurance Corporation (FDIC) Insures individual accounts in financial institutions for up to $100,000!!
Why does Money have value?
Because WE say so!
TradeMoney facilitates trade because its value can transfer between countries.
Why do we trade? Because trade creates VALUE!
Trade Creates Value Activity
Trade Creates Value ActivityThere will be 5 groups.
Group 1 Group 2 Group 3 Group 4 Group 5
Round OneWithout looking - pick a piece of candy out of the
bag (DO NOT EAT IT YET!)Rate your happiness with the candy from 1-10 –
record this number1 being least happy10 being most happy
On your guided notes, write the sum of your group’s ratings under round one.
Round TwoTrade candies within your group – everyone must
trade!Rate your happiness with the candy from 1-10 –
record this rating1 being least happy10 being most happy
On your guided notes, write the sum of your group’s ratings under round two.
Round ThreeNow everyone must trade outside of your borders / group –
So now, Trade candies with someone in a different group.Once you trade - GO BACK TO YOUR GROUP!Rate your happiness with the candy from 1-10 – record this
number1 being least happy10 being most happy
On your guided notes, write the sum of your group’s ratings under round two.
GO BACK TO YOUR SEATS!Share your sums with the rest of your class.
What was happening?**You can eat your candy while we discussWhat did the trade within your group
represent?National Trade
What did the trade between the groups represent?International Trade
Did trading increase your happiness with the candy you received? Why or why not?
Did you end up happier or less happy than you started? Why?
CW/HLARead Chapter 21.3
Reminders:Study for Economics Test on Thursday!Econ Notes due Thursday!