The document summarizes the history and evolution of money, including barter economies, commodity and fiat currencies used in early societies and colonial America, the development of paper currency and coins, and characteristics and modern forms of money like demand deposit accounts, M1 and M2. It also outlines the Federal Reserve System as the central bank of the US that issues paper currency in the form of Federal Reserve Notes.

1. Chapter 14 Section 1

2. Federal Reserve System (FED)
Privately owned, publically controlled central bank of the United States
Federal Reserve Notes
Paper currency issued by the FED
The Evolution of Money
Barter Economy
Money-less economy that relies on trade or barter
“Mutual Coincidence of Wants”
Money in Primitive Societies
Commodity Money
Money that has an alternative use as an economic good
Fiat Money
Money by government decree

3. Money in Colonial America
Commodity or fiat money
Tobacco
Wampum
Early Paper Currency
Specie in the Colonies
Specie
Money in the form of gold or silver coins
Spanish Peso
“Triangular Trade”
From “Talers” to “Dollars”
Pesos known as “pieces of 8”
Monetary Unit
Standard unit of currency in a country’s money supply

4. Characteristics and Functions of Money
Characteristics of Money
Portable
Durable
Divisible
Limited Supply
Functions of Money
1. Medium of Exchange
Money or other substance generally accepted as payment
for goods and services
2. Measure of Value
A function of money that allows it to serve as a common
way to express value
3. Store of Value
A function of money that allows people to preserve value
for future use

5. Modern Money
Demand Deposit Account (DDA)
Account from which funds can be removed by writing a
check and without having to gain prior approval from the depository institution
M1
Component of the money supply relating to money’s role as
a medium of exchange
M2
Component of the money supply relating to money’s role as
a store of value