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Money: Shubhangi Bhatt (32) EN (H)

Money functions as a medium of exchange that is socially and legally accepted. It addresses shortcomings of the barter system such as the double coincidence of wants. Money provides advantages like facilitating exchange and acts as a store of value. It performs primary functions like being a medium of exchange and secondary functions like being a store of value. There are different types of money including commodity money, whose value comes from the commodity it is made from; representative money, which are token coins or certificates; credit money, which is a claim that can be used to purchase goods; and fiat money, whose value is determined by legal means rather than availability of goods. Money inflation occurs when the value of money falls and prices increase, and it can

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Gaurav Kapoor
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81 views

Money: Shubhangi Bhatt (32) EN (H)

Money functions as a medium of exchange that is socially and legally accepted. It addresses shortcomings of the barter system such as the double coincidence of wants. Money provides advantages like facilitating exchange and acts as a store of value. It performs primary functions like being a medium of exchange and secondary functions like being a store of value. There are different types of money including commodity money, whose value comes from the commodity it is made from; representative money, which are token coins or certificates; credit money, which is a claim that can be used to purchase goods; and fiat money, whose value is determined by legal means rather than availability of goods. Money inflation occurs when the value of money falls and prices increase, and it can

Uploaded by

Gaurav Kapoor
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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MONEY

SHUBHANGI BHATT [32]


EN ( H )
MONEY - WHAT IS IT ?

Token  that functions as
a medium of exchange
that is socially and
legally accepted in
payments of goods and
services and
in settlements of debts.
SHORTCOMINGS OF BARTER SYSTEM

Double Coincidence

Divisibility of commodity

Store of value

Transfer of value

Future Payments
MONEY - ADVANTAGES

Exchange

POWERS
Borrow
Or OF Storage
Loan
MONEY

Transfer
MONEY - FUNCTIONS

Contingen
Primary Secondary t

Medium of Store of Basis of


exchange value credit

Measuremen Transfer of Liquidity of


t of value value property

Standard of
Distribution
future
of income
payments
MONEY – MISC. FUNCTIONS

 Index  of repaying capacity
 Bearer of options
 Basis  of modern market
economy
 Credit  and capital formation
 Index  of growth
 Free  society
 Productivity
MONEY - TYPES

Representative
Credit Money
Money

Commodity
Fiat Money
Money

MONEY
COMMODITY MONEY

Commodity money’s
value comes out of
the commodity from
which it is made

E.g. : Gold , Silver ,


Copper etc.
REPRESENTATIVE MONEY

Representative money is 
money that consists of 
Token coins, physical
 token such as certificates
and even digital 
certificates.
CREDIT MONEY
Credit money is any 
claim against a physical 
or legal person that 
can be used for  the 
purchase of goods 
and services 
FIAT MONEY
Fiat money is any
money whose value is
determined by legal
means, rather than the
strict availability of
goods and services
which are named on the
representative note
MONEY - DRAWBACKS

 Centralization  of resources
 Encouragement of  loan taking 
 Trade cycles
 Prestige issue
 Group formation
 Over capitalization
 Money inflation
 Moral evils
 
MONEY INFLATION - DEFINITION
According to Professor
C.Crowther

A stage in which the value of 
money falls down and prices are 
increasing up.

 According to Professor Pigou

When money is expanding more


than in proportion to income
earning activity.
MONEY INFLATION - CAUSES

 Deficient  Financing 
 Commercial Policy
 Taxation Policy
 Increase in Cost
 Increase in Demand
 Slag in Production
 Loose Administration
A GLANCE OF
MONEY INFLATION RATES
MONEY INFLATION - TYPES

CREEPING
[ <2%]

GALLOPING INFLATION MOVING


[ > 15 % ] [2–5%]
RATES

RUNWAY
[ 5 – 12 % ]
MONEY INFLATION – SOCIAL EFFECTS

NEGETIVE EFFECTS  POSITIVE EFFECTS 

 Rise in immorality  Increase in


 Increase in economic employment
disparity  Increase in income
 Political unrest  Development of
 Increase in taxation banking
 Hoarding  Prosperity
 Bad effects on savings  Economic dynamics
THE END

THANK YOU

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