Money

• Economie
• Middelbare school
• vwo
• Leerjaar 3

Groepen

Money

Why was gold replaced by paper. Paper is worthless right? Or isn't it?....

Paper

Piece of paper as evidence for storage of gold at the blacksmith

Paper is interchangable for amount gold

You might as well pay with this paper evidence

And paper money (notes) was born....

Read 

• The introduction of money
• The value of money

Write down:

Intrinsic value

Nominal value

Internal value

External value

The value of money

Intrinsic value = the material value 

nominal value = the value printed on it

internal value = the number of products you can purchase 

external value = the amount of foreign currency you can purchase

Source A. Which type of value

1. Intrinsic
2. Internal
3. External
4. Nominal

Source B. Which type of value

1. Intrinsic
2. Internal
3. External
4. Nominal

Source C. Which type of value

1. Intrinsic
2. Internal
3. External
4. Nominal

Source D. Which type of value

1. Intrinsic
2. Internal
3. External
4. Nominal

Fiat money

money that is based on confidence

Exercise 6 - 8

The functions of money

Exchange function = buying products with it

Calculation function

Hoarding function = saving money

Read 'Money in a POW camp'

Answers

1. It requires the double coincidence of wants

2. Cigarettes were used as money so indirect barter

3. Hoarding function: saving cigarettes 

Calculation function: how many cigarettes for a good night sleep

Exchange function: buying apples with cigarettes

The ten game

Read: Money and social conventions on the Island of Yap

Commodity = things that represent value like gold, silver, Pokemon cards

Fiat money = thing that is used as money. Based on confidence

Questions:

1) Explain why these fei was not a conveniant form of money

2) Explain how this problem was solved

Read: Money and social conventions on the Island of Yap

1) Explain why these fei was not a conveniant form of money

It took substantial effort for an new owner to take his fei homer after comleting a transaction

Read: Money and social conventions on the Island of Yap

2) Explain how this problem was solved

New owners accepted a claim to the fei

Exercises

Page	Exercise
25	2
26	4
27	5 - 8

What are the tasks of the Central Bank of the Euro-zone?

Tasks

Issue notes and coins

Keeping inflation around 2 %

Making sure online paying runs smoothly and safe

Increase in price level as a percentage

Why is a high inflation bad for the economy?

Why

As prices go up 

Purchasing power goes down

Trust in money decreases

People switch to other currency or barter