Money, Banking & Financial Mar
Money, Banking & Financial Mar FIN 312
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This 3 page Class Notes was uploaded by Marcella Senger on Friday October 30, 2015. The Class Notes belongs to FIN 312 at Texas A&M University - Commerce taught by Dale Funderburk in Fall. Since its upload, it has received 17 views. For similar materials see /class/232415/fin-312-texas-a-m-university-commerce in Finance at Texas A&M University - Commerce.
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Date Created: 10/30/15
I WHY NOT BARTER HARD TO CUT A DEAL Text talk Dif cult to achieve a coincidence of wants double Meaning barter is a clumsy timeconsuming inef cient process Barter is not very conducive to economic progress and development Too much time spent in trading goods that should be spent in producing them Q What is meant by the phrase double coincidence of wants A Two conditions 1 Each party must want What the other party has forming the basis for a voluntary exchange N Each party must value the other s good more than hisher own else no voluntary exchange Will occur II AND HOW DOES MONEY HELP Money serves as a medium of exchange If money is generally acceptable in exchange for goods and services which it is then it makes it much easier to achieve that double coincidence of wants By serving as a medium of exchange money makes it easy to buy stuff It facilitates voluntary exchange It reduces transactions costs It improves efficiency With barter it is very dif cult to write contracts calling for future payment How do you pay for something over time And how does money help solve this problem Money serves as a standard for deferred payments 111 With barter it is difficult to save in order to IV buy something in the future save What do you And again how does money help Money serves as a store of value Is money a good store of value Are there other nonmonetary stores of value Which is better With barter it is difficult to express relative valuesprices For example What is the value of a durian relative to the price of a banana or a cantaloupe With barter it s difficult to express relative prices Money makes it easy How By serving as a unit of account Or a standard of value A common denominator of value
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