Money is a symbolic representation of a promise. It’s a token of that promise.
What promise?
The promise that someone would be willing to do something for you.
You would offer the token to redeem the promise.
Qualifications
Something that serves as money must meet two important qualifications.
♦ It must be easy to transfer from one person to another
♦ It must preserve buying power over time
Buying power is the value that a specific unit of money represents. If value is considered as goods and services that people want, then buying power is the amount of goods and services that a specific unit of money represents.
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Simple ideas about money.
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Abstraction
Tangible Something that exists in the physical world and is capable of being perceived through the physical senses such as sight or touch. One thing to note is that physical items have certain inherent limitations, such as limited quantity. Examples: apples, oranges, gold coins, real estate Abstract Something without any physical form that lacks …
Inflation
Economic value is goods and services people want. Buying power is the amount of economic value that a specific unit of money represents. Inflation is a reduction of buying power due to loss of economic value. Inflation happens when the specific token utilized as money fails to preserve buying power over time. Questions to consider: …