Chapter2MoneyMcGraw-Hilly/rwinCopyright 2006byTheMcGraw-Hill Companies,Inc.All rights reserved
McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 2 Money
CONTENS02.1 Characteristics of Money2.2Evolutionof the PaymentsSystem2.3The Futureof Money2.4 Measuring Money2-2
2-2 CONTENS 2.1 Characteristics of Money 2.2 Evolution of the Payments System 2.3 The Future of Money 2.4 Measuring Money
2.1 Characteristics of MoneyC1.MoneyMoney is an asset that is generally acceptedas payment for goods and services orrepaymentofdebt.2-3
2-3 2.1 Characteristics of Money 1. Money • Money is an asset that is generally accepted as payment for goods and services or repayment of debt
Characteristics of MoneyO1. A means of payment.2. A unit of Account3. A Store of Value2-4
2-4 Characteristics of Money 1. A means of payment. 2. A unit of Account 3. A Store of Value
2.2 The Payments SystemO1. Types of MoneyCommodity Money - Things that haveintrinsic valueFiatMoney-Value comesfromgovernment decree (or fiat)2-5
2-5 2.2 The Payments System 1. Types of Money • Commodity Money – Things that have intrinsic value • Fiat Money – Value comes from government decree (or fiat)
The Payments SystemC2.Checks Instructions to the bank to take funds fromyour account and transfer those funds to theperson orfirm whose name is written in the“"Pay to the Order of"line.2-6
2-6 The Payments System 2. Checks • Instructions to the bank to take funds from your account and transfer those funds to the person or firm whose name is written in the “Pay to the Order of” line
The Path of a Paper CheckCFigure2.1ThePathofaPaperCheckYou hand apapercheck from yotrbanktoamerchantinexchangeforgroceries.Themerchantdepositsthecheckintothemerchant'sbamkand the merchant's account is credited.Themerchant'sbanksendsthechecktothelocalFederal ReserveBank.The Federal Reserve:Thisstepuses.Creditsthemerchant'sbank'sreserveaccountandmoney.2.Debits yourbmk'sreserveaccount.TheFederalReservereturnsthechecktoyourbankYourbankdebitsyourcheckingaccountbytheamountofthecheck(Yourbankhasseveral daystosendthecheckbackthroughthesystem ifyouhaveinsufficientfundsin youraccount.)2-7
2-7 The Path of a Paper Check
福The PaymentssSystema3.Other Forms of PaymentsCredit CardsDebit CardsElectronicFundstransfersStoredValue Cards2-8
2-8 The Payments System • 3.Other Forms of Payments • Credit Cards • Debit Cards • Electronic Funds transfers • Stored Value Cards
2.3 Future of MoneyOElectronic money?Paperless money?2-9
2-9 2.3 Future of Money • Electronic money? • Paperless money?
LiquiditydLiquiditya measure of the ease an asset can be turnedinto a means of payment (Money)2-10
2-10 Liquidity Liquidity • a measure of the ease an asset can be turned into a means of payment (Money)