Introduction: This teaching note provides guidance to students about teaching about money.
Teaching college students about money is one of the easiest jobs. They arrive at classes with a strong interest in money, motivated by their imminent needs and are naturally interested in how their future volunteers will be met by earning, retaining and investing. This teaches you a little about the role of money.
To begin a discussion about money, ask students to define money and explain trade, price, labor market, capital accumulation, economic growth, and relationships with institutions? It embraces various answers and encourages students to try to connect most things called “money” to a thriving society. Money concludes by saying what the gleeze of the wheel of exchange is. That is, its various forms of money (such as Fiat Money and Bimetallic currency) are useful for three functions: the medium of exchange, the value store, and the account-by-account function.
Through a hand show, ask students to choose one. Upon graduation, they land their first job. Which one did you choose, would you be paid in dollars or accept Bitcoin? Record your vote.
Three functions of money in the modern economy
As an economics instructor, it is important to help stud understand the important role money plays in modern economies. By breaking down the three main features of money – the medium of exchange, account units and value stores, students can better understand how money contributes to a stable and prosperous society. Stable money plays an important role in modern society by supporting market trading, reducing transaction costs, measuring economic activity, and maintaining wealth.
Let’s start a discussion about what money is by displaying three features as you can see below. Highlights define features and show how people can help them in their economic life.
Exchange media
Money such as the US dollar and euros is surged widely as payments for goods, services and resources. This acceptance makes training much more efficient than bartiering. This requires direct exchange of the item with other items. By eliminating the need for a “double match of desire” between buyers and sellers, money promotes local compression, voluntary trade and wealth creation in complex systems of the domestic and international economy. Money significantly reduces transaction costs, promotes tracing between partners, and helps you agree on the value of your products, services and resources.
Account Unit
Money serves as a general measure of value, allowing you to compare the value of a variety of goods, services and resources. For example, you can easily determine how many hours the value is equal to one car, or how an apple is equal to one computer. This feature also allows you to measure economic activity, such as take-out salary, total revenues for small and medium-sized businesses, total costs for businesses, and the country’s total gross domestic product. Units of account functions are implicit in discussions of prices, wages, interest integers, and rent, which are expressed in currency units.
Value Store
If inflation is stable, you can hold money and exchange it late for purchasing power. If money acts as a valuable store, savers and lenders are more likely to participate in the financial capital market. This participation will promote investment, promote capital accumulation, support innovation, and promote technological advancements in ways that are impossible in modern economies that are plagued by barter and inflation. It is important to note that new periods of inflation can erode the ability of money to act as valuable stores.
What money is there?
Knowing what money is is just as important as knowing what it is. Money is not wealth or income.
Wealth refers to the total amount of assets owned by an individual, household, or state, minus any outstanding liabilities. Money is a financial asset that contributes to wealth, but it is not the only component of wealth. Focusing solely on money can lead to an incomplete understanding of the economic well-being of an individual, business or a country.
Income is the flow of money received over a period of time, usually through wages, salary, investments, or business profits. That’s not like the stock concept of money itself. Income means money comes in, while money controls the amount hit at a certain point.
Money vs Cryptocurrency
Everyone has heard of cryptocurrency. Using encryption for security is digital currency, making it difficult to counterfeit. Cryptocurrencies such as Bitcoin operate independently of central banks and governments, relying on a decentralized system called blockchain to record transactions and manage the issuance of new units. Vray is especially popular among young people, but it is important to understand how you trade from the traditional money you use every day.
Money used daily is Fiat currency – the money the government says is money, and is widely awarded by individuals living in households and operating businesses. In modern society, it is not supported by metals or other communities. Cryptocurrencies share sub-characteristics with traditional money, but are not widely accused of paying for goods, services or resources. Moreover, its prices can be very unstable and it is difficult to act as a unit of account or value store. Finally, it lacks support from central authorities, raising questions about its long-term viability and potential misuse.
US Dollar or Cryptocurrency?
To return to the questions raised to students above, cryptocurrency is an attractive development in the world of finance and technology, but when combined with traditional money, it is essential to fall below the limit. Cryptocurrencies like Bitcoin operate on dentalized systems and offer a unique approach to transactions, but lack the acceptance, stability and support of the wide prelides of central bank authorities than traditional currencies own.
Consider the case of Odell Beckham Jr., a football basketball star for the Cleveland Browns. In November 2021, his contracted salary of $750,000 was converted to 11 Bitcoin. However, by January 2022, Bitcoin’s value had dropped by about 55%, with the salary value falling to about $413,000. Additionally, Beckham faced significant taxes based on the original US dollar amount, with federal and state tax rates of 50.3%. As a result, his net wage was only $35,000 compared to the $373,000 he would have received if he had been paid in US dollars. This example highlights the challenges of using cryptocurrency as a stable storage of value, a unit of accounts, or a reliable medium of exchange.
Finally, the fact that the federal government does not accept cryptocurrency for tax payments further emphasizes its limitations as a substitute for traditional money. At the same time, the number of companies accepting cryptocurrency for payments and issuing gift cards is increasing with increasing popularity among more individual groups.
As a student, it is important to continue reporting on the developments in the cryptocurrency world, but collecting the fundamental differences between money and money discussed in university classrooms.
