What types of Assets are Money - Teachoo.JPG

What is Money in Modern Economy

In Modern Economy,

Money consists of Currency Notes and Coins

It Also includes Demand Deposits + Term Deposits


Currency Notes

They are issued by Monetary authority of the country

In India, it is Reserve Bank of India



They are issued by Govt of India


Demand Deposits

Balance in Savings and Current Accounts of Banks is called Demand Deposits

It is called Demand Deposit because it can be withdrawn anytime on demand (by issuing cheques etc)


Term Deposit

They are deposits for a fixed period of time

Example - Fixed Deposits have a fixed maturity date

What is Money in Modern Economy - Teachoo.JPG

Difference between Demand Deposits and Term Deposits - Teachoo.JPG



What are the Functions of Money Functions of money can be derived from Definition of Money Definition of Money Functions of Money Money is Medium of Exchange Measure of Value Store of Value And Means for Standard Deferred Payment Money Act as Medium of Exchange Goods and Services can be exchanged for money Money Act as Measure of Value We decide Price of different goods and services in terms of money Money Act as Store of Value Money can be saved and Stored for use by future generation Money Act as Means for Standard of Deferred Payment If Payment to be made in future , we know amount to be paid What types of Assets are Money Suppose a Person is very Rich. He has the following assets Money in his Pocket Money in Banks Property Which one of these is Money? These are Money These are not Money What is Money in Modern Economy Money consists of Currency Notes and Coins It also includes Demand Deposits + Term DepositsMoney Money In Pocket Money In Bank Currency Notes Term Deposit Coins Demand Deposit

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Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 14 years and a teacher from the past 18 years. He teaches Science, Economics, Accounting and English at Teachoo