|
|
VAULT CASH: Paper currency and metal coins possessed by a commercial bank, either stored in the actual bank vault or temporarily resting teller drawers. Vault cash is primarily used to facilitate daily bank transactions (that is, cashing checks), and together with Federal Reserve deposits make up legal bank reserves.
Visit the GLOSS*arama
|
|
|
|
                           EXCHANGE: The process of trading one valuable commodity (good, service, or resource) for another. An exchange can be voluntary, such as what transpires through a market, or involuntary, such as when taxes are imposed by government. Exchange is fundamental to the study of economics, markets, and market-oriented economies. Most exchanges in a modern, complex market-oriented economy involve a commodity on one side and a monetary payment (that is, price) on the other. In essence, a buyer gives up money and gets a good, while a seller gives up a good and gets money.Suppose, for example, that Duncan Thurly buys a new OmniMotors XL GT 9000 Sports Coupe for $50,000. Duncan gives up $50,000 and obtains an OmniMotors XL GT 9000 Sports Coupe. The OmniMotors dealer gives up an OmniMotors XL GT 9000 Sports Coupe and obtains $50,000. This is an exchange of $50,000 and an OmniMotors XL GT 9000 Sports Coupe. More Than MoneyExchanges, however, need not be in the form of money-for-good. They can also be on the form of good-for-good, what is termed barter. For example, Duncan Thurly might trade a thoroughbred racehorse for an OmniMotors XL GT 9000 Sports Coupe. In this case, the price Duncan pays for "buying" the OmniMotors XL GT 9000 Sports Coupe is one thoroughbred racehorse. Alternatively, Duncan could think of this as "selling" his racehorse in return for one OmniMotors XL GT 9000 Sports Coupe.Money for MoneySome exchanges involve ONLY money, that is, money is exchanged for money. With such exchanges the currency of one nation is exchanged for the currency of another nation through want are termed foreign exchange markets. This sort of exchange facilitates foreign trade--trade among nations. If, for example, Duncan Thurly wants to purchase a Queoldiolian sundial produced in the quaint and courteous country of Northwest Queoldiolia, then he must transfer U.S. dollars into Queoldiolian queolds (the currency of Northwest Queoldiolia).Addressing ScarcityThe motivation behind an exchange is scarcity. People are better able to satisfy their unlimited wants and needs with limited resources through exchanges. Each side has what the other side wants and needs. Duncan Thurly wants an OmniMotors XL GT 9000 Sports Coupe. The OmniMotors dealer wants $50,000. The exchange allows each side to obtain greater satisfaction of their unlimited wants and needs. - Duncan is able to satisfy his need for transportation to and from work (which means he can earn income and buy other goods and services), as well as his psychological desire to drive around in an expensive sports car.
- The OmniMotors dealer is able to satisfy all sorts of wants and needs with the goods and services purchased with the $50,000 revenue.
A key element in an exchange is limited resources. Because resources are limited, no one has all of the wants-and-needs satisfying goods that they want or need. People can get what they DO NOT have by trading for something that they DO have. Morg, the cave dweller, DOES have a satchel of nuts and berries, but he DOES NOT have mastodon steaks. So... he exchanges a few nuts and berries for mastodon steaks. Duncan DOES have $50,000, but he DOES NOT have an OmniMotors XL GT 9000 Sports Coupe. So... he exchanges $50,000 for an OmniMotors XL GT 9000 Sports Coupe.Voluntary or NotAn exchange can be either voluntary or involuntary.- Voluntary exchanges are synonymous with market exchanges. Buyers buy and sellers sell voluntarily through markets. Both sides of a market do so voluntarily because they benefit from the exchange. Morg exchanges his nuts and berries for mastodon steaks because he would rather have mastodon steaks. But what about his trading partner, Gork? Gork trades mastodon steaks for nuts and berries because he would rather have nuts and berries. Both sides get what they value more.
- Involuntary exchanges are primarily instigated by governments through taxes, laws, or regulations. For example, Duncan pays $2,500 in state sales taxes on the purchase of his OmniMotors XL GT 9000 Sports Coupe. These sales taxes are then used to provide public goods and services, such as salaries of highway patrol officers. Duncan would not voluntarily pay $2,500 for the salaries of highway patrol officers, who will then monitor the excessive speed of his OmniMotors XL GT 9000 Sports Coupe. Government, however, is forcing Duncan to exchange $2,500 for this public service.
Recommended Citation:EXCHANGE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: September 23, 2023].
Check Out These Related Terms... | | | | | | |
Or For A Little Background... | | | | | |
And For Further Study... | | | | | | |
Search Again?
Back to the WEB*pedia
|
|
|
BLACK DISMALAPOD
[What's This?]
Today, you are likely to spend a great deal of time going from convenience store to convenience store wanting to buy either an AC adapter for your CD player or storage boxes for your family photos. Be on the lookout for crowded shopping malls.
Your Complete Scope
This isn't me! What am I?
|
|
|
Cyrus McCormick not only invented the reaper for harvesting grain, he also invented the installment payment for selling his reaper.
|
|
|
"People of mediocre ability sometimes achieve outstanding success because they don't know when to quit. " -- George Allen, U.S. senator
|
|
ME
Montreal Exchange
|
|
|
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.
User Feedback
|
|
