"Money vs. Barter" History and Concepts

This module covers money and central banking, and looks at how a barter economy differs from a monetary economy. The financial crisis of 2008 is explained in order to examine the use of an array of different instruments in recessions, and the use of monetary policy through quantitative easing. Professor Larraín explains the functioning of a barter economy, the history of the role of money, and three functions of money: as a means of exchange, a unit of account, and a store of value. There is a discussion of the different types of money; precious metal-backed, fiduciary, etc. Larraín explains Gresham's Law, which says that bad money displaces good money, and finally explains monetary base (or the monetary aggregates) and concepts of M1, M2, and M3.