Economics is all about opportunity costs.
Sunday, June 11, 2023
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Economics Money Time Finance Personal Finance Personal Growth HEROES project Financial literacy
What is money? If you live in the United States, you probably think of money as dollar bills. People in Japan might think of the Yen. People in France, Germany, and Italy might think of the Euro. Economists Milton Friedman and Allan Meltzer describe money as “a commodity accepted by general consent as a medium of economic exchange. It is the medium in which prices and values are expressed; as currency, it circulates anonymously from person to person and country to country, thus facilitating trade, and it is the principal measure of wealth.”
What if you thought of money a little bit differently? When thinking about money, try substituting “my time” in place of “money” because time is often what you have to give up to receive money.
Let's say a farmer wants a new phone. He knows how to grow crops but can’t build his own phone. The farmer sacrifices his time to grow crops that he can sell to others for money. Once he obtains this money he can buy a new phone. The owner of an electronics store sacrifices her time working at the store to earn money. What does she do with that money? She might buy the farmer's crops at the grocery store. The money is just an intermediary for the time for both the farmer and the electronics store owner.
While this is a simplistic example,...
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