Chp 29

Chapter 29 is about the monetary system. haha "gastronomical desires". Anyway, the social custom of using money for transactions is extraordinarily useful in a our society. If there were no paper money than we would have to rely on barter, which is the exchange of one good or service for another. An economy that relies on barter will have trouble allocating its scarce resources efficiently. This economy is said to require double coincidence of wants, which is the unlikely occurrence that two people each have a good or service that the other wants. Money is the set of assets in an economy that people regularly use to buy goods and services from other people. According to the economist's definition, money includes only those few types of wealth that are regularly accepted by sellers in exchange for goods and services. Money has three functions in the economy. It is a medium of exchange, a unit of account, and a store of value. A medium of exchange is an item that buyers give to sellers when they want to purchase goods and services. A unit of account is the yardstick people use to post prices and record debts. To measure and record economic value, money is used as the unit of account. Store of value is an item that people can use to transfer purchasing power from the present to the future.