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SPEEDY Railway Book (English)

Concept & Function of Money At a Glance

Concept & Function of Money At a Glance

Concept & Function of Money At a Glance

There are Five Agenda:
1). Fundamental terms & Questions.
2). Monitory evolution of Mankind.
3). Creation of Money-facts & laws.
4). Fiat Money.
5). Modern Money.
Some important definitions are given below:

  • Money: - Any item or record acceptable for payments for goods & Services or for repayments of tax.
  • Currency: - When money is in actual use or circulation as a medium of exchange.
  • Coins: - A piece of actual metal which is standardises, and use as a medium of exchange.
  • Cash: - Either money in the Physical currency form, or current asset associable immediately.
  • Wealth:-It is the abundance of valuable material position or resources.
  • Commodities:-It is any substantially fungible, marketable items that satisfied one needs.
  • Property:-Something that belongs to someone, either privately or publicly or collectively.
  • Good Money & Bad Money:-When two forms of commodities money are circulation and as per law both have the same face value, the more valuable commodity is called Good Money.
  • Virtual Money:-Any unregulated digital money, issued and control by its developers and used within a virtual community.
  • Fortune: - a huge store of wealth. Example: - A successful IPO of any company make the promoters supper rich.
Creating of money facts & laws:
The relation between human Society & economic types is:

  • Human Society + Production/Distribution/consumption of goods & services=Economy System.
  • There are three types of economy system: - 1). Command Economy, 2). Pre Mkt. Economy, 3). Green Economy.
  • Depend on levels Economy has two parts: - 1). Low level, 2). Advanced level.
  • Note: Poverty:- Poverty cannot remove by money alone; in long run poverty can only be eliminated by development of Capabilities.

Gift Economy:-In most basic-survival society, face goods are produced, needs are limited. Warns and not existent. Hence valuable are not traded and sold, but are given. No revolves are expected.
Example: Theravate of Thailand-in Buddha math and Dana-Punya in Hinduism.
Barter Economy: Goods and Service directly exchange on other Goods and Services, with out any medium of exchange. The exchange immediate but not delayed.

Different between Commodity exchange and Gift Exchange

Commodity Exchange
Gift Exchange
Immediate exchange
Delayed exchange
Alienable goods
Inalienable goods
Actors independent
Actors dependent
Quantitative relationship
Qualitative relationship
Between objects
Between people

Negatives effects of Barter Money:

  • An inefficient system due to ‘double coincident of wants’.
  • No common major of value.
  • Defaults payments problem.
  • Storing wealth very difficult.
  • Positives effects of Barter Money:
  • Very useful during hyper-inflation.
  • Very good for unknown parties.
Four function of Money:

  • Medium of exchange: money can easily dissimilar object.
  • A medium of value: it is a standard, common, dynamic nation of straight.
  • A standard effort payment: it can be badly affected inflation, devolution etc.
  • A store of value: It can be reliable safe, stored & retired. Inflation directly hard this function.
Money Supply:
  • In economics, money refers to any financial instruments that can be fulfil a function of money. If you consider all financial instruments, it becomes the nation of money supply. Thus money supply is the total amount of monetary assets at a given point of time.
  • Money supply is equals to (Currency + notes & Coins + bank money).
  • Bank money is the largest component of money-supply.
  • Commodity Money: earlier money was made upon commodities that at value in them, as well as in the money form.
Fiat Money: 
  • When physical commodities are very hard to mine and uses as coins, then government have to issue Fiat Money.
  • It may be printed on Paper.
  • And since it is guaranteed by the government, it becomes legal tenders.
  • Its misuse can lead to hyper-inflation
Modern Money: 
  • it is a virtual currency, which is created and controls solidly by developers.
  • It is built on Block Chain Concept.
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