describe+the+functions+of+money+and+the+need+for+exchange;

The Functions of money:

**Definition: ** //Money is anything which is universally acceptable as a medium of exchange. Therefore if we can buy goods and services with it then it could be seen as money.// Without money you would have to buy goods, by offering other things in exchange. This is known as B**artering** and is difficult as you must have something that the other person wants. It would be a nightmare for me as an Economics teacher- can you imagine me going to the checkout at Carrefour and offering to pay for my groceries with a couple of hours of tuition in Economics. Is it likely they would accept? There is no problem with money as by definition it is "universally accepted".

So what could be regarded as money?

- Notes and coins?  - Money in a current account in the bank? -Credit and debit cards?  - Money in a savings account? -Paypal and other online accounts? [|Extension reading]

If it is tied up for a long time i.e. you can’t withdraw it for 2 years it is not classed as money. **Task: Exercise 7 p 29**

**FUNCTIONS OF MONEY** 1. It can be used as a **means of exchange** or to buy resources 2. It is a **measure of value** e.g. 1 mars bar = 40p is worth more than a mini cadbury choc bar which is 20p 3. It is a **store of value** e.g. it keeps its value

**WHAT IS GOOD MONEY?** 1. It should be ACCEPTABLE  2. It should be DURABLE and hard-wearing <span style="font-family: 'Trebuchet MS','Comic Sans MS',Arial,sans-serif; margin-top: 0px;"> 3. It should be PORTABLE and easy to carry <span style="font-family: 'Trebuchet MS','Comic Sans MS',Arial,sans-serif; margin-top: 0px;"> 4. It should be DIVISIBLE i.e. you can give change <span style="font-family: 'Trebuchet MS','Comic Sans MS',Arial,sans-serif; margin-top: 0px;"> 5. It must be SCARCE

<span style="font-family: 'Trebuchet MS','Comic Sans MS',Arial,sans-serif; margin-top: 0px;">**Tasks** <span style="font-family: 'Trebuchet MS','Comic Sans MS',Arial,sans-serif; margin-top: 0px;">a. Make a list of your own money supply. Can you calculate the total? <span style="font-family: 'Trebuchet MS','Comic Sans MS',Arial,sans-serif; margin-top: 0px;"> b. How would you find out the money supply of the Chinese economy? <span style="font-family: 'Trebuchet MS','Comic Sans MS',Arial,sans-serif; margin-top: 0px;"> c. Why is a 1rmb coin ‘good money’? <span style="font-family: 'Trebuchet MS','Comic Sans MS',Arial,sans-serif; margin-top: 0px;"> d. Why is a pig not ‘good money’? Why is a stone not ‘good money’? <span style="font-family: 'Trebuchet MS','Comic Sans MS',Arial,sans-serif; margin-top: 0px;">e. Now click on the activity below to learn more about the characteristics of "good" money

media type="file" key="Functions of money activity.swf" width="360" height="270"

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