Money

Anything which is widely accepted in the discharge of obligations

Development of Money

Commodity Money- The earliest form of money consisted of goods like rice, wheat, cattle, etc

Metallic Money- the metals such as gold, silver, bronze, etc were used to make coins. The government kept the right to issue coins and certify their quality and weights.

Paper Money- It was introduced to supplement metallic money. When it was introduced it was backed up by the same amount of gold but now it only a proportion of that.

Bank Money- Paper money has been supplemented or replaced by bank money. It leads to bank deposits, credit card, debit cards, etc

Kinds of Money

Standard money- For such type of money, intrinsic value (real value) is equal to face value( the value written on the coins).

Token Money- Its face value is greater than its intrinsic value. A rupee is a standard unit of money in India, but its face value is greater than its real value

Characteristics of Money

Cognisability- The money should be easily recognized by all.

Utility- The money for the best alternative purpose

Portability- Easy carrying

Durability- coins are more durable than paper currencies

Indestructibility- money should not be disfigured easily

Stability- the value of money should not be changing

Homogeneity- use of same metal or paper

Universal Acceptability- should be accepted in all states of the country.

Functions of Money

The medium of exchange- it facilitates the buying and selling of goods and services as a medium of exchange.

A unit of account- It is used as the measure of the value of all goods and services.

Standard of deferred Payments- Money facilitates the settlement of debts and future transactions.

Store of Value- It is a form of holding wealth. If one feels money is more he saves and use it as and when required

Transferable- it facilitates the easy transfer of value. The disposal and purchase of assets can be done very easily