TEKS 113.31(d)(11), Social Studies (Economics)
Subject: Economics – High School
TEKS 113.31(d)(11)
Summary of TEKS 113.31(d)(11)
TEKS 113.31(d)(11) explains the functions of money, its characteristics, and the benefits and challenges of barter, currency, and debit cards. Money serves as a medium of exchange, a store of value, and a unit of account. Different forms of money, like commodity, fiat, and representative money, have unique strengths and weaknesses. Understanding these concepts helps us see why money is essential to modern economies.
Key Concepts of TEKS 113.31(d)(11)
- Functions of Money: Medium of exchange, store of value, and unit of account.
- Characteristics of Money: Includes commodity money, fiat money, and representative money.
- Comparison of Systems: Barter is simple but inefficient, currency is portable but can be lost, and debit cards are convenient but rely on technology.
By learning these ideas, students can understand how money shapes economies and the pros and cons of different exchange systems.
Section 1: What Are the Functions of Money?
TEKS 113.31(d)(11)(A)
Explanation: Money serves three important purposes in an economy:
- Medium of Exchange
- Money allows people to buy and sell goods and services without needing to trade items directly.
- Example: You can use a $5 bill to buy a sandwich instead of trading another product for it.
- Store of Value
- Money holds its value over time, so you can save it and use it later.
- Example: If you earn $10 today, you can save it for a month and still use it to buy something later.
- Unit of Account
- Money gives everything a clear value, making it easy to compare prices.
- Example: A candy bar costs $1, and a soda costs $2. You can tell the soda is twice as expensive.
Key Idea: Money makes trade easier, helps people save, and gives goods and services a clear value.
Section 2: What Are the Characteristics of Money?
TEKS 113.31(d)(11)(B)
Explanation: Money comes in different forms, but all types share certain characteristics. Let’s explore three types:
- Commodity Money
- Money made from something valuable, like gold or silver.
- Example: In the past, people used gold coins as money because they were valuable.
- Challenge: Commodity money is heavy and can run out if the resource is scarce.
- Fiat Money
- Money that has value because the government says it does.
- Example: U.S. dollars are fiat money. They are just paper but are accepted as payment everywhere.
- Benefit: Fiat money is lightweight and easy to produce.
- Representative Money
- Money that represents a claim on a valuable resource.
- Example: In history, people used paper certificates backed by gold stored in a bank.
- Challenge: If the resource runs out, the value of the money disappears.
Key Idea: Money works best when it is easy to use, widely accepted, and backed by trust.
Section 3: Comparing Barter, Currency, and Debit Cards
TEKS 113.31(d)(11)(C)
Explanation: Each system of exchange has its advantages and disadvantages:
1. Barter
- How It Works: People trade goods or services directly without using money.
- Positive Aspect: No need for money; useful in small or local economies.
- Negative Aspect: Hard to find someone who wants what you’re offering and has what you need.
- Example: Trading a loaf of bread for a gallon of milk works only if both people agree.
2. Currency
- How It Works: Physical money like coins or bills is used to buy goods and services.
- Positive Aspect: Widely accepted and easy to carry.
- Negative Aspect: Can be lost or stolen.
- Example: You can use a $10 bill to buy groceries anywhere, but if you lose it, it’s gone.
3. Debit Cards
- How It Works: A card connected to your bank account lets you pay electronically.
- Positive Aspect: Convenient, secure, and eliminates the need to carry cash.
- Negative Aspect: Requires technology and can lead to overspending.
- Example: You can use a debit card to shop online, but if the system crashes, you can’t use it.
Key Idea: Different systems work well in different situations, but each has strengths and weaknesses.