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You are here: Home > Learning Materials > Economics > Introduction to Macroeconomics > Money Worksheet (Beginners) |
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Worksheet on Money (Beginners)MONEY - What is it? What use is it? How do we control it? How do we get it? Actually this worksheet doesn't answer the last of those four questions, but perhaps it got you to start reading it! STEP 1 - What is money? You may think you know the answer to this straight away, and you certainly don't need biz/ed to help you recognise money, but why is it that we think of this as money? The function of money has been performed by many other things over the years, and our current form of money has evolved as the best way of trading. Why is this? Look in your textbook or course notes to find out the functions of money and fill them in the table below:-
To fulfil these functions, money has to have certain characteristics. What are these?
STEP 2 - What can we use as money? As mentioned, many items have served as money in the past. Tobacco, shells and playing cards have all been used, but have now faded into history (as money, that is!). Why is that? The answer may lie with how well they fulfil the characteristics of money. In the table below, put how well you think each different form of money fulfils that characteristic. Does each one fulfil that characteristic well, indifferently or badly?
From this we can perhaps see why our money has evolved the way it has. It measures up well against most of these characteristics, though perhaps not all of them. What problems might there be with our current notes and coins as a form of money? STEP 3 - What alternatives might there be? Clearly while notes and coins have their place as a form of money, we need other ways to store our money. To find out some other ways that the Nationwide Building Society (http://www.nationwide.co.uk) offer you to store your money, go to their site and do the following:
What happens to the rate of interest in Nationwide accounts as the minimum time period increases? Why is this the case? STEP 4 - Earning money that isn't money!! Over the years people have always been very ingenious in the ways they have found to trade. Although we now have an almost universally accepted form of money, people today are no exception. One modern example of this is the LETS (Local Exchange Trading) system. The LETS groups are locally organised groups who instead of using money, trade in their own LETS currency. To find out some more go to the LETS site (http://www.gmlets.u-net.com/) or to an information page about LETS systems (http://www.gmlets.u-net.com/explore/found/index.html) and try to answer the questions below:- How does the LETS system work? What are the advantages of the LETS system of trading? How well does LETS money tie in with the characteristics of money that we looked at above?
Where is your nearest LETS group? |
