Table 2.5: Concepts

Before Disaggregation
Money is based on scarce objects with intrinsic value. People associated money with objects that had intrinsic value and were inherently scarce. Most Western civilizations used metals (gold, silver, copper) for money.
The Innovation and What It Does
Modern currency. Modern currencies separate the idea of value from the idea of intrinsic worth. Money is just an arbitrary token that people use to keep track of the value of other things, and it needs only to be scarce. United States dollars are valuable only because everyone agrees to use them.
Outcome
Economists realized that if money is just a token, and the government regulates the supply of tokens, then the government can increase or decrease the number of tokens to regulate the economy.
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