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2-MONEY, IntroductionMan is an intellectual animal., The concept of money is an important revolution brought by man to reduce the problem, of barter system., Modern economy is dependent on money., Its a important evolution for the well being of humankind, I] BARTER SYSTEMIT REFERS TO EXCHANGE OF GOODS FOR GOODS
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Difficulties in barter system-, , ●, , 1] Problem of double coincidence of wants-It is one of the major limitation of barter system., -e.g. if Manisha wants cloth and wants to exchange for rice and Anand wants rice ,, but does not want cloth in exchange., -In this case the exchange of goods is not possible due to different needs., - This is known as double coincidence of wants., 2] Lack of common measure of value-There is no standard unit value for exchanging goods and services., -Thus it is difficult to measure the value of a commodity., - E.g. 2litres of milk to 1kg of rice., , 3] Difficulties in storage of goods-Storage of goods is a need for future consumption., -in case of perishable goods it is not possible like milk, fish,eggs, vegetables., - Sometimes due to lack of storage facilities, goods are not stored., 4] Indivisibility of certain goods-In barter system divisibility of goods is not always possible., -It is difficult to fix a portion of exchange in case of indivisible goods., - E.g . A sack of half wheat cannot be exchanged for a goat.
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5] Problem of making deferred payments-Deferred payment means payment made in future., -Repayment of loan was difficult due to exchange of commodities., E.g. in case of perishable goods it was not possible., , Definition-, , ●, , Professor Walker,, , ●, , ''MONEY IS WHAT MONEY DOES''
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EVOLUTION OF MONEY, , ●, , E- MONEY, PLASTIC MONEY, CREDIT MONEY, , PAPER MONEY, METALLIC COINS, METALLIC MONEY, COMMODITY MONEY, , ANIMAL MONEY
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ANIMAL MONEY, , ELECTRONIC MONEY, , COMMODITY MONEY, PLASTIC MONEY, , ANIMAL MONEY, BANK/CREDIT MONEY, , METALLIC COINS, , PAPER MONEY
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FUNCTIONS OF MONEY-, , ●, , PRIMARY, , 1]Medium of exchange., 2] Measure value or unit of account., SECONDARY, 1] Standard of defer payment., 2] Store of value., 3]Transfer value., CONTIGENT, 1] Measurement of exchange unit., 2] Basis of credit., 3] Impart of liquidity., 4] Macro Economics.
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PRIMARY FUNCTION OF MONEY., 1]Medium of exchange- The most important, function is to serve as medium of exchange., Any commodity can be purchased or sold for, money., , 2] Measure of value/unit of account- Price is value, of a commodity or a service expressed in terms of, money., Different countries have different currencies., Money enables to compare prices of different, commodities., , SECONDARY FUNCTION, 1] Standard of deferred, paymentUnder barter system this method, was not possible., But due to evolution of money, this problem has been, overcome., By serving as a standard, payment of a measure ,it makes, lending and borrowing easy., , 2]Store of valueMoney not only satisfies present, wants but also makes an, provision for satisfaction of, wants in future., This is possible due to savings., , 3] Transfer of valueMoney enables transfer of value, from one person to another, person and place to place., Purchasing of goods is possible, due to money.
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3] CONTIGENT FUNCTIONS- In modern economy money plays an important role in all the, economic transaction., 1]Measurement of, National income –, It is expressed in money, terms., , 2] Basis of creditMoney provides a base, for liquidity in the, creation of credit., , 3] Imparts liquidity of, wealthMONEY IS THE MOST, LIQUID ASSET., Money can be easily, converted in any form, and even in other ways, too., , 4] Measurement of, macro economic, variablesUnits like Gross National, Product, Total Savings, and Total Investment, are all measured in, terms of money., , Concept of Black Marketing, Meaning ●Money received in cash, but not accounted in for, and tax is not paid to the, govt., Tax is evaded., , ●, , Sources●It is earned, through legal, and illegal, means., , Impact ●It encourages illegal, activities such as, corruption,bribery,blac, k marketing etc., Economic and social, instability are created, in the economy., ●, , Method to control●DEMONETIZATION, is one of the tools, which many countries, have adopted.
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QUESTIONS., , 1] What is the meaning of barter system? Explain the Problems in barter system., 2] Define Money and itss evolution., 3] Write in short a note on Black Marketing., 4]Explain in detail the function of Money.
