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'''Money''' is defined as something which serves as a means of exchange, a store of value, and a unit of account and represents only an extremely small fraction of the real wealth of any given society or [[country]] where it is used. The [[currency]] which serves as money may be backed by some tangible commodity, such as the [[gold standard]], or may be [[fiat money]], such as [[Federal Reserve]] notes. Alternatively, trade may be carried on using commodity pay, wherein existing commodities are assigned exchange values but not explicitly designated as money.

'''Money''' is defined as something which serves as a means of exchange, a store of value, and a unit of account and represents only an extremely small fraction of the real wealth of any given society or [[country]] where it is used. The [[currency]] which serves as money may be backed by some tangible commodity, such as the [[gold standard]], or may be [[fiat money]], such as [[Federal Reserve]] notes. Alternatively, trade may be carried on using commodity pay, wherein existing commodities are assigned exchange values but not explicitly designated as money.

==The Development of Money==  

==The Development of Money==

The earliest discovered forms of money were easily-carried items with some inherent value, such as [[salt]] (used in ancient [[Rome]]) and fishhooks (used by [[American Indians]]). This replaced or supplemented pre-existing [[barter]] systems. Precious metals, such as [[copper]], [[gold]], and [[silver]], have made good coins, being both easily transportable and having inherent value. In 1933, the [[United States]] abandoned the [[gold standard]]<ref>[http://www.u-s-history.com/pages/h753.html The Gold Standard]</ref>, switching over to [[fiat currency]], which has no inherent value beyond the government's assurance that it has value.   

The earliest discovered forms of money were easily carried items with some inherent value, such as [[salt]] (used in ancient [[Rome]]) and fishhooks (used by [[American Indians]]). This replaced or supplemented pre-existing [[barter]] systems. Precious metals, such as [[copper]], [[gold]], and [[silver]], have made good coins, being both easily transportable and having inherent value. In 1933, the [[United States]] abandoned the [[gold standard]],<ref>[http://www.u-s-history.com/pages/h753.html The Gold Standard]</ref> switching over to [[fiat currency]], which has no inherent value beyond the government's assurance that it has value.   

==Money Neutrality and the Money Market==

==Money Neutrality and the Money Market==

Money may be viewed as neutral or non-neutral regarding the real [[economy]]; it is disputed whether changes in the money market cause changes in real markets. The money market itself consists of a money supply (typically fixed for any given period) and a demand function for money. Because the quantity of money is typically exogenously given, the only variable determined in the money market is the price of money.

Money may be viewed as neutral or non-neutral regarding the real [[economy]]; it is disputed whether changes in the money market cause changes in real markets. The money market itself consists of a money supply (typically fixed for any given period) and a demand function for money. Because the quantity of money is typically exogenously given, the only variable determined in the money market is the price of money.

==External links==  

==External links==

* [http://www.measuringworth.com/ppowerus/ "Purchasing Power of Money in the United States from 1774 to 2008"], translates the value of a dollar in one year to the value today or any year

* [http://www.measuringworth.com/ppowerus/ "Purchasing Power of Money in the United States from 1774 to 2008"], translates the value of a dollar in one year to the value today or any year

==See Also==

==See also==

* [[Currency]]

* [[Currency]]

* [[Fiat currency]]

* [[Fiat currency]]

[[Category:Economics]]

[[Category:Economics]]

[[category:Finance]]

[[Category:Finance]]

==References==

==References==