Unit 4; Video 1 Summary

On the money market, there are three different types of money. First, there is commodity money which is what has been in use the longest and takes on the many forms such as crops or livestock. Second, there is representative money, which is money that represents something else, such as bills being representative of their equal amount in gold and silver. This kind of money is severely unstable as the worth fluctuates. Thirdly, there is fiat money. This money is not backed by anything except the word of the government, and must be accepted for transaction. Money has three functions as mediums of exchange, store of value and unit of account showing that price has worth(more expensive gives impression of higher quality).