Acceptability, means of payment, and media of exchange
AbstractThis essay explains the use of fiat money, or why intrinsically useless objects are accepted as payment in transactions. People accept a particular object as a means of payment because others do: social conventions matter more than the intrinsic characteristics of the object itself. Not everything can become a fiat money, though. If an object is especially costly to hold, for example, it will not be accepted as a means of payment. This explanation of fiat money is illustrated in a simple theoretical economic model. ; This essay was originally published in The New Palgrave Dictionary of Money and Finance. It is reprinted in this journal with the permission of Macmillan Press and Stockton Press.
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Bibliographic InfoArticle provided by Federal Reserve Bank of Minneapolis in its journal Quarterly Review.
Volume (Year): (1992)
Issue (Month): Sum ()
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- Dwight R. Lee, 2001. "The Internet, the Market, and Communication: Don't Ignore the Shoe While Admiring the Shine," Cato Journal, Cato Journal, Cato Institute, vol. 20(3), Fall.
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