1. Chapter 10 Money Catch Me if you can, scene 9

2. Table of Contents • What is Money • Timeline • Federal Reserve • Money Slide Show • Inflation • Could you survive • Taxes

3. Money • Anything that serves as a medium of exchange, a unit of account, and store of value • Without money, people get things from bartering

4. Barter • The direct exchange of one set of goods or services for another • Usually works only in small populations http://oneredpaperclip.blogspot.com/

5. Problem with Bartering • Have to find someone who wants what you have AND who you want what they have

6. Problem with Bartering • Both products have to be “equivalent in the eyes of the owners”

7. Example • You have: Cow • Someone else: 2 Chickens

8. Currency • Coins and paper bills used as money • (historical examples: cattle, salt, dried fish, furs, precious stones, gold, silver, porpoise teeth, rice, wheat, shells,olive oil.)

9. Bank • An institution for receiving, keeping and lending money

10. Three Uses/ Functions of Money • Medium of Exchange • Unit of Account • Store of Value

11. Medium of Exchange • People accept money in trade for goods and services

12. Unit of Account • Also known as VALUE • A means for comparing the values of goods and services

13. Store of Value • Something that keeps its value if it is stored or held on to rather than used • (exception= inflation)

14. Six Characteristics of Money • Durability • Portability • Divisibility • Uniformity • Limited Supply • Acceptability

15. Durability • Can withstand wear and tear • Used over and over again • BAD examples: Wheat, Olive oil

16. Portability • Can take it anywhere Bad example: cows, boulder

17. Divisibility • Can be easily divided into smaller denominations • Bad Example: stones

18. Uniformity • Any 2 units of money must be the same for accuracy Bad example: fish

19. Limited Supply • If too much , then No longer useful • Bad example: Pebbles, Sand

20. Acceptability • Able to exchange the objects that serve as money for goods and services

21. Three Sources of Money • Commodity Money • Representative Money • Fiat Money

22. Commodity Money • Objects that have value in themselves and that are also used as money • Good example: salt, corn, cattle, cotton, tobacco

23. Representative Money • Objects that have value because the holder can exchange them for something else of value • Good example: IOU, silver, gold

24. Fiat Money • Legal tender • Money that has value because the government has ordered that it is an acceptable means to pay debts • Good example: coins, paper money

25. Timeline Events in American Banking

32. By 1860: Approximately 8,000 different currencies existed in the United States

40. Who was the U.S. President from 1929 – 1933? • Herbert Hoover

41. Herbert Hoover • Hoover Hotel: Cardboard Box • Hoovervilles: Multiple cardboard boxes • Hoover Flag: Empty pockets turned inside out