what is money according to economics
In Todays Scenario money is an important and basic necessity and basic need.In the beginning of civilization there were barter system where goods are exchange for goods.Thus many things use to trade such as food items , clay, gold , live stock etc.One of the problem of barter system is that the usable possession suits each other wants.
For example I may posses a cow but want to exchange them for horse .The problem here is to find the right person who agrees to exchange it with cow.
Money can be described under any of the following points.
- It should be served as medium of exchange
- It is a common measure of Value.
- It is serve as store of value.
Definition Of Money
In layman words money can be defined as what we use to pay things is termed as money.
According to Stanlay Withres “money is what money does”
According to Milton “Money is anything that serve the purpose of providing temporary abode for general Purchasing power.
Money is something that is freely used and generally accepted as a medium of exchange or as a unit of accounts.Its definition contain currency demand deposit and other financial assets.
Types of Money \
Money is classified under following
- Commodity money
- Fiat Money
- bank Money
Commodity Money :
it is a good who’s value is termed as money.Gold coin are example of commodity money.
is a good the value of which is less then the value of which is represent as money.Dollar bills are example of Fiat money.
consist of the book credit that the bank extend to their depositor Transaction made on cheque drawn on deposit held at bank involve the use of bank money.
Function Of money
- medium of exchange
- As a medium of Value
- As a standard of deferred payment
- As store of value