week 1-2 Flashcards
is anything that is authorized by the law to be generally accepted as medium of exchange and a standard of value within a given political territory and a given time.
Money
FUNCTIONS OF MONEY:
- As a medium of exchange
- As a standard of value
- As a store of value
- As a standard of deferred payment
The word “money” is derived from the Latin word
“Monet”
“Monet” which means money or mint or “moneta” which means
Coin
what is the first known form of currency – emerged nearly 5,000 years ago?
Mesopotamian Shekel
It aim was to remove the shortcomings of the Barter System.
Money
direct exchange of goods and services for other goods and services
COMMODITY MONEY or Barter
consist of coins made of Gold, Silver, Copper or nickel as a mode of payment.”
METALLIC MONEY
the first metals used as money?
Copper, iron, lead and tin
This created the problem of measuring the weight & value and used as a bullion
UnCoined Metals
They had a standard weight & value and As a next step, standard coins were created.
Coined Metals.
Metallic money can be
Whose Face Value is equal to the value of metal contained in it.
FULLY BODIED
Metallic money can be
Its Face Value is Higher than Intrinsic Value (Value of Metal)
TOKEN MONEY
Originated as a receipt issued by Goldsmiths.
PAPER MONEY
Refers to the Notes issued by the State or by the Bank, usually the Central bank.
PAPER MONEY
Paper Money can be:
- is a check or other form of currency that can be exchanged for physical money in a stated amount
Representative Paper Money
money is convertible into standard coins made of gold or silver. Under it the paper currency issued by the Central Bank was fully backed by the reserves of gold and silver of equal value kept by it.
Convertible Paper Money
is declared legal tender by the government that issues it. This includes money in circulation such aspaper moneyor coins.
Fiat Paper Money
Includes Bank money (different instruments offered by the Banks.) Cheques, Drafts, etc are examples.
CREDIT MONEY
Convenient, Safe and easily convertible into cash and Its like near money.
CREDIT MONEY
