As noted in the video Stalag 17 and in your readings, many things have been used as money over time: cigarettes, gold, paper currency (like the U.S. dollar), etc. Describe the functions of money and consider the U.S. dollar as an example. Although the U.S. dollar has little or no intrinsic value, why do people want it so much? Can you think of other examples of things that act as “money” in our society?
Money is any worthy element that functions as a medium of trade and a store of quality. In the present day, we employ notes and coins as cash. In any case, in the past trade was the medium of trade. The deal includes trading or swapping merchandise and administrations for different products and administrations. For illustration, a rancher who develops potatoes needs fabric to make garments. So he trades a sack of potatoes for a move of material in the town market with a fabric creator.
FUNCTIONS OF MONEY
1)It is a medium of exchange that is money is, in general, an acceptable method in exchange of good and services, for example, a manufacturer would accept money in exchange for his merchandises.
2) It acts as a measure of value that is goods and services are valued in terms of money. Money acts as a standard measure.
3) Unit of account i.e. the value of diverse goods and services is calculated and accounts kept in terms of money.
4) It acts as a store of value. Money can be stored as savings for prospect use. It can be used to purchase goods and services in the future.
5) It acts as a standard of deferred payments. A debt acquired at present can be paid later using the money.
Elements of Money
Money has four standard capacities:
It gives a standard of worth
It is a medium of trade
It is a method for purchasing using a loan
It is a store of worth
Attributes of cash
Money ought to be:
Tough – needs to withstand ordinary wear and tear
Convenient – should be effectively conveyed
PROPERTIES OF MONEY
1) Acceptability -for money to be used as a medium of exchange it must be acceptable to everyone.
2) Scarcity-Money should be limited in supply i.e relatively scarce.
3) Divisibility-money must be divisible into small units. This enables people to do both the transactions requiring little money and those that require a lot of it.
4) portability-money should be convenient to carry around.it should be light and not bulky.
5) Durability-money should be able to last for a long time without getting torn or defaced. It must stay for a long time retaining its texture and shape.
6) Homogeneity-money should be uniform in quality i.e. monies of the same denomination must be familiar.
Generally acknowledged as a method for installment – everybody in the nation must consent to acknowledge it as a medium of trade
Stable in quality – must be justified regardless of the same after some time
Effectively separable – 100 pennies = $1.00
Hard to fake – keeps up trust in the coin
Some of the possessions used as money in the society include jewelry, petroleum, Diamond.
