Supply of Money - What is Money in Modern Economy

Transcript

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