functions of money pdf

�\ |�" endobj <> � �z@� �0& �J{*օ�� 9�� t� � 11 0 obj /Length 672 >> 28 0 obj .� .� stream endstream endstream 1 0 obj Right from the beginning, money has been performing an important function as medium of exchange in the society. ̹�5b��Sh��ete��l0F��I�0`{�n��鏆��h�cW�Z��q|��n��P��Ty�P!d�%"��"��.��^$�q7T1B-��"�Ϟ;�!�x":;y��M��oh��׬��kdT��Gk~ړ�?�B�G�ڊ��#`_z ��t+l��p7$��=�j06ds�.P��G@t>��]8��[w��u��ڐ�#�2��ݛz�?��[7,��;|��0za��F��ɀ�kx�t�4Zȡ��I�R��n��pwM7�}��a:�e�Ɋ*�Q��BX��(�4��*�%��X�q�[t`��u��#5N�/ �V�� X�]z2��S�}J��Z�)/[S��覤�Z�جysC�fKE�h��e�P�e�un62�-��0�|uSz1��պ��b��ǣ �U�~��7k�L�K�1��x[�ߖ^�:�6 ��5P�SU-�$Dcj�֤m�. Importance of a developed money market and its various functions are discussed below: 1. Financing Trade: Money Market plays crucial role in financing both internal as well as international trade. � It is a medium of exchange, a unit of account and a store of value. x�3R��2�35W(�*T0P�R0T(�Y@�� stream 8 0 obj ��c�� kl� x�3R��2�35W(�*T0P�R0T(�Y@�� Commercial finance is made available to the traders through bills of â¦ � �\ |�# endstream 25 0 obj Knowing the value or price of a good, in terms of money, enables both the supplier and the purchaser of the good to make decisions about how much of the good to supply and how much of the good to purchase. endobj This worksheet is about the functions of money. Money is a set of assets that are generally used and accepted as a medium of exchange for goods and services in an economy. � Microsoft® Word 2010 � 23 0 obj endstream 2019-02-21T10:28-05:00 <> To begin, let's think about a frontier household. 4 0 obj x�3R��2�35W(�*T0P�R0T(�Y@�� z@� �0&�2�Գ��ɹ x�3R��2�35W(�*T0P�R0T(�Y@�� The task is to match functions with definitions. Clipping is a handy way to collect important slides you want to go back to later. 4. � <> <> <> 17 0 obj � <> x�3R��2�35W(�*T0P�R0T(�Y@�� ebbbbbN��C`Y�X�X�X�X�X��!��@�@�@�@�@��XV V V V V V�t,+++++++pg��8� � 18 0 obj I٫|F��9ռ�ba3�)��Su�O/��X��u�mV�l��J��wGRNN�D��~yI��\&��#��_f��^�D*�I�OzB`��xa�Ì��'�L�V��Ot1[Jj�4��~t��WΏ8�!$��A��+�nH�$��_-F�=p�?d��9�s�b>W�6t��` ��'E*�dH�sq�Ĕ5x�d�s. <> � <> 3. Money as a Medium of Exchange For example, if the baker who supplied the green-grocer [â¦] � Everything that fulfills these three functions can be considered money. stream 10 0 obj endstream Last year, you sold your game system to your friend Jimmy for $125 in cash. � /Resources 20 0 R /Filter /FlateDecode /Length 67 >> x�3R��2�35W(�*T0P�R0T(�Y@�� For, âHow does money separate the â¦ 12 0 obj (Mankiw, 1999, pp.155-156) These three different functions can be distinguished in the following ways: 3.1. /Resources 20 0 R /Filter /FlateDecode /Length 67 >> 1. <> � SECONDARY FUNCTIONS OF MONEY Money has the potential to influence an economy, by influencing interest rates, price levels, resources, etc. endstream endobj endobj ��c�� k�� stream endobj /Resources 30 0 R /Filter /FlateDecode /Length 2082 >> Money performs many primary and secondary functions. endobj money does. Discuss todayâs economic concepts: functions of money, characteristics of money, currency, and circulation of money. endobj If the cost prices of all goods go up in monetary terms, i.e., there is a general rise in the cost price degree, the value of money in terms of any good must have come down â in the sense that a unit of money can now buy less of any good. � �!>F x��ڱ � A��{��4S��\��I� of money to reduce these costs. (da?ŀ)eO�PI�qt��tN��Z��?�˴|��'�v�S�'A�H�M�l��L��>z�?��[�@��X3M�G%;փ�r�c�D�ZθH�ΎÒRzQg�bJ/��{7�7�7n< � ��C2� Find out all about the primary functions of money using this awesome quiz and worksheet. <> You see, a measuring unit like kilometer is used in measuring distance in order that we can compare the distance from one place to another. What is the primary function of money exhibited here? 3. ��^�27��%+��x�c;�>`�H�uҟ��i,�,�p��W�L�yr��v��qoу�J�_�7�|wZ��G��9{Vy�E?.� + ۚF�2L��8ȑonn�G��)=ȑ�L�mM��:ȑ��s�#ә�( �Ha"�0B�!�/k�� !>� x��aV; �a{7��DX��q%�p%�J0�9��2L�/-��N��@c&��/@��N�&B!��Da"�0B�!L�&B!��Da"�0B�!L�&B!��Da"�0B�!L�&B!��Da��[�m6�v��?�gVgOu�Y��kV�W��Da"�0B�!L��O`�}��/�b6e�1�X�(��Da"�0B�!l�)��o��v�-��x��g�sޢŗ �j9,#!��Da"�0B�!L�f��#'��Ik��_-�e$�0B�!L�&B!�� t[ � �z@� �0& Students are given the descriptions of three major functions of money (Medium of exchange, Store of value, Unit of account). Money serves three basic functions: Medium of exchange: because you can use it to buy the goods and services you want, everyoneâs willing to trade things for money. endstream � stream /Resources 18 0 R /Filter /FlateDecode /Length 111 >> � � 4. <> endobj Wholesalers sell the same goods to the consumers in exchange of money. Another function of money is that it is used as a measuring tool for goods and services. Financial Instruments Money Market Instruments Capital Market Instruments 4. x�3R��2�35W(�*T0P�R0T(�Y@�� ,++++++p:��8� function of money exhibited here? At the grocery store last week, you had to decide whether to buy the 14.5 oz. <> Rewards of factors of production in the form of wages, rent, interest and profit are determined and paid in terms of money. Money has no power to satisfy human wants, but it commands power to purchase those things, which have utility to satisfy human wants. �z@� �0& Let us take a look at the three main functions of money. Money performs many functions in a modern economy. Money is paid by the buyer who buys the stream �\ } ' ADVERTISEMENTS: The following points highlight the top six functions of money. x�3R��2�35W(�*T0P�R0T(�Y@�� If there were no money, goods would have to be exchanged through the process of barter (goods would be traded for other goods in transactions arranged on the basis of mutual need). This function of money is universal: money appears in some form wherever there is active trade, in every advanced economy and many primitive economies. � As stated above, money primarily functions as a medium of exchange. 15 0 obj /Resources 20 0 R /Filter /FlateDecode /Length 67 >> The demand for any good or service is usually pictured in economics as a function of its price, holding income and other factors constant. .� Money performs five important functions :-Medium of exchange: Money acts as a medium of exchange as it's generally accepted. You just clipped your first slide! �!> 6 0 obj It is used as a store of value. <> � âMoney is a matter of functions four - a medium, a measure, a standard, a store.â Thus, money is a medium of exchange, a measure of value, a store of value, and a standard of deferred payments. 14 0 obj �z@� �0& 22 0 obj �!>� �\ |�& /XObject <> ��ebbbbbN��C`Y�X�X�X�X�X��!��@�@�@�@�@��XV V V V V V V�� They heat the cabin and cook their food with wood; a nearby stream and well furnish water. money it issues with a functionally equivalent and much more efficient digital sys-tem. stream endobj Functions of Money - Free download as Powerpoint Presentation (.ppt), PDF File (.pdf), Text File (.txt) or view presentation slides online. Now customize the name of a clipboard to store your clips. � be most importantly a function of the interest rate, income, and wealth in the economy. Money also functions as a suitable unit of account. endobj � stream INTRODUCTION TO MONEY: ORIGIN, HISTORY AND FUNCTIONS Key Concepts Barter, the purpose of money, early and current forms of money Summary This lesson introduces students to types of money (cash, coin) and the purposes of money. Now, suppose the family decides that the children need a new set of clothes. ��c�� k�� Other Functions: Money also performs such functions which affect the decisions of consumers and governments. Public ��c�� ks� x�3R��2�35W(�*T0P�R0T(�Y@�� 87�%��x endobj x�3R��2�35W(�*T0P�R0T(�Y@�� ۆ>W��e�Ao c��pp�^ ��kǚ�٤�֦W�w��7W�� Qu ��ӊ��)kͽ�ZӰ��`&ƹ�KH��j�g�4bNt�h�|a�>�]W��+�0 >�� H��W�n��ȯ�Gj`��M6/ه��]�ؑ��`h�mqM� Functions of Money: In general terms, the main function of money in an economic system is âto facilitate the exchange of goods and services and help in carrying out trade smoothly.â Its basic characteristic is general acceptability. endstream Microsoft® Word 2010 The following are the utmost important functions of money. endstream � �!>� � Money and its Functions. 1. � It transfers value. �$��I�~�! <> They are given below. In the case of holding money, the "price" is the opportunity cost of holding one dollar for one year, the interest rate. ��c�� ke� �z@� �0& � .� ��ebbbbbN��C`Y�X�X�X�X�X��!��@�@�@�@�@�@��XV V V V V V�t,++++++p:��8� Name some ways the dollar was used. B. The most important functions are given in the form of a couplet quoted below. Money also functions as a unit of account, providing a common measure of the value of goods and services being exchanged. endstream �z@� �0& So money serves all of these functionsâ it is a medium of exchange, store of value, unit of account, and standard of deferred payment. � Functions of Money In this story, the dollar that Matt found was used for many things. Medium of Exchange The primary function of money is that it acts as a medium of exchange. <> Functions Of Money: Medium of Exchange: Goods and services can be traded with money. Commodity versus Fiat Money Money has taken a wide variety of forms in different cultures. <> <> Money is basically any commodity that is generally accepted in the exchange of goods and services, and when any of the above types of inflation occurs, money begins to lose some of its functions, and I shall be discussing how this happens in my following essay. On the payment of money, purchase of goods and services can be made i.e. <> >> �\ |�$ stream stream �z@� �0&�2�Գ��ɹ stream It serves as a medium of exchange. stream .� (�D�Vy�_\\|��u�ٔ�777/nP>y~~~yy��v��ޖ#\]]�"�>"l��+�|��+5��뾌Eﮫ.��>�YE�}D��g�߾}+��E?~�hpv�=��$®ʨ��.e�,��ot��4}9}3\~]>.��D�U��n_��}ؤR��q�F��"�r��g��'z��+I��߿��Y��ׯ_��ߖ;��Z/}P1vRF�2��lʨUy�2v��3�Ǉg�'�_L��7��Ϸ��*�/=�7�V�� A Medium of Exchange: The only alternative to using money is to go back to the barter system. �z@� �0&�2�Գ��ɹ Function # 1. Hope you'll find it useful. � <> <> 13 0 obj 27 0 obj However, it also has developed secondary functions that derive from its use as a â¦ �z@� �0&�2�Գ��ɹ � endobj Medium of exchange: Money can be used for buying and selling goods and services. can of diced tomatoes for $1.75 or the 28 oz. 2. Store of Value: It can be saved. <> Lynda McAndress Functions of Money The earliest forms of money arose spontaneously in barter economies when experienced traders identified certain commodities that were so widely desired for actual use in the society that they could reasonably count on their acceptability as payment in almost any trade. endobj Three functions of money are: 1. �_��YV V V V V V�t,++++++p:�� Products are exchanged for money that money can be then used to buy other product. endobj ��ebbbbbN��C`Y�X�X�X�X�X�X�;+��@�@�@�@�@��XV V V V V V�t,+++++++++++++++++++��\��kMbY��ךĲ��:��Pb�� Store of value: This function refers to the transferring of present purchasing power to coming days or months. x�3R��2�35W(�*T0P�R0T(�Y@�� 3. 21 0 obj These functions help us transit in goods and services with ease. Producers sell their goods to the wholesalers in exchange of money. %PDF-1.5 %�� Functions of Money. x�3R��2�35W(�*T0P�R0T(�Y@�� stream endstream /Resources 20 0 R /Filter /FlateDecode /Length 67 >> Money is received by the seller who sells the good. � /Resources 20 0 R /Filter /FlateDecode /Length 67 >> �z@� �0&�2�Գ��ɹ %PDF-1.4 � Money as a store of value Does not deteriorate and stores value 16. endobj endobj Functions of Money. x��Yێ�6}_`�A��M�� @�� E7M��S�E�z��Vj�ү�)ʢ,z�-�x%q8s8. Functions of Money. � � endobj 2019-02-21T10:28-05:00 /SMask 29 0 R /Length 2105 >> (i) Helpful in making decisions: can of diced tomatoes for $2.55. x�5�K No matter whether money is gold or paper or beads or knives, in any economy it has three functions. That is people hold money for aiming future. This means that people can buy or sell goods and services with the help of money. Structure of Financial Markets Debt and Equity Markets Primary and Secondary Markets Exchanges and Over-the-Counter Markets Money and Capital Markets 3. endstream The functions of money can be known from its definition. In a think-pair-share activity, students first work independently determining how a list of items fulfill all or some of the functions of money in the US economy. However, as a system of exchange the barter system would be highly impracticable today. It is a standard for measuring values. stream Apart from its function as a medium of exchange, money also serves as a store of value and a unit of account. 16 0 obj They will be endobj Money is the commodity or fiduciary instrument (credit or paper money) that carries purchasing power between trades and over time. endobj endobj /Resources 20 0 R /Filter /FlateDecode /Length 67 >> endobj � goods and services are exchanged for money. It shows how money facilitates transactions by comparing a money system to a barter system. � 29 0 obj 1] Money â¦ 5 0 obj You must be well familiar with all of them. � endstream endobj 2 0 obj <> endobj 61 0 obj <> endobj 63 0 obj <> endobj 62 0 obj <> endobj 66 0 obj [65 0 R 68 0 R 69 0 R 70 0 R 71 0 R 72 0 R 73 0 R 78 0 R 79 0 R 80 0 R 81 0 R 82 0 R 85 0 R 87 0 R 89 0 R 92 0 R 94 0 R 96 0 R 97 0 R 98 0 R 99 0 R 100 0 R 101 0 R 102 0 R 105 0 R 107 0 R 109 0 R 111 0 R 112 0 R 113 0 R] endobj 75 0 obj [292 0 R 293 0 R 294 0 R 295 0 R 296 0 R 297 0 R 298 0 R 299 0 R 300 0 R 301 0 R 74 0 R] endobj 77 0 obj [302 0 R 303 0 R 304 0 R 305 0 R 306 0 R 307 0 R 308 0 R 309 0 R 310 0 R 311 0 R 76 0 R] endobj 115 0 obj [114 0 R 116 0 R 117 0 R 118 0 R 119 0 R 120 0 R 121 0 R 122 0 R 123 0 R 124 0 R 125 0 R 126 0 R 127 0 R 130 0 R 132 0 R 134 0 R 136 0 R 138 0 R 140 0 R 141 0 R 142 0 R 143 0 R 144 0 R 145 0 R 146 0 R 147 0 R 148 0 R 149 0 R 150 0 R 151 0 R] endobj 153 0 obj [152 0 R 154 0 R 155 0 R 156 0 R 157 0 R 160 0 R 162 0 R 164 0 R 165 0 R 166 0 R 167 0 R 168 0 R 169 0 R 170 0 R 171 0 R 172 0 R 173 0 R 174 0 R 175 0 R 176 0 R 177 0 R 178 0 R 179 0 R 180 0 R 181 0 R 182 0 R 183 0 R 184 0 R 185 0 R 186 0 R 187 0 R 188 0 R 189 0 R 190 0 R 191 0 R 192 0 R 193 0 R 194 0 R 195 0 R] endobj 197 0 obj [196 0 R 198 0 R 199 0 R 200 0 R 201 0 R 202 0 R 205 0 R 207 0 R 209 0 R 211 0 R 213 0 R 215 0 R 217 0 R 218 0 R 219 0 R 220 0 R 221 0 R 222 0 R 223 0 R 224 0 R 225 0 R 228 0 R 230 0 R 232 0 R 234 0 R 236 0 R 238 0 R 239 0 R 240 0 R 241 0 R 242 0 R 243 0 R] endobj 245 0 obj [244 0 R 246 0 R 247 0 R 250 0 R 252 0 R 254 0 R 256 0 R 258 0 R 259 0 R 260 0 R 261 0 R 262 0 R 263 0 R 264 0 R 265 0 R 266 0 R 267 0 R 268 0 R 269 0 R 270 0 R 271 0 R 272 0 R 273 0 R 274 0 R 275 0 R 276 0 R 277 0 R 278 0 R 279 0 R 280 0 R 281 0 R 282 0 R 283 0 R 284 0 R 285 0 R 286 0 R 287 0 R 288 0 R 289 0 R 290 0 R 291 0 R] endobj 244 0 obj <> endobj 246 0 obj <> endobj 247 0 obj <> endobj 250 0 obj <> endobj 252 0 obj <> endobj 254 0 obj <> endobj 256 0 obj <> endobj 258 0 obj <> endobj 259 0 obj <> endobj 260 0 obj <> endobj 261 0 obj <> endobj 262 0 obj <> endobj 263 0 obj <> endobj 264 0 obj <> endobj 265 0 obj <> endobj 266 0 obj <> endobj 267 0 obj <> endobj 268 0 obj <> endobj 269 0 obj <> endobj 270 0 obj <> endobj 271 0 obj <> endobj 272 0 obj <> endobj 273 0 obj <> endobj 274 0 obj <> endobj 275 0 obj <> endobj 276 0 obj <> endobj 277 0 obj <> endobj 278 0 obj <> endobj 279 0 obj <> endobj 280 0 obj <> endobj 281 0 obj <> endobj 282 0 obj <> endobj 283 0 obj <> endobj 284 0 obj <> endobj 285 0 obj <> endobj 286 0 obj <> endobj 287 0 obj <> endobj 288 0 obj <> endobj 289 0 obj <> endobj 290 0 obj <> endobj 291 0 obj <> endobj 64 0 obj <> endobj 49 0 obj <>/MediaBox[0 0 612 792]/Parent 2 0 R/Resources<>/Font<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI]/XObject<>>>/StructParents 6/Tabs/S/Type/Page>> endobj 50 0 obj <>stream Tomatoes for $ 1.75 or the 28 oz exchange for goods and services ease! 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Acts as a medium of exchange the primary function of money or the 28.! Points highlight the top six functions of money is easy to borrow-and lend.. Paid by the buyer who buys the function of money: money acts as a measuring tool for and! To store your clips 28 oz dollar that Matt found was used many. And as a suitable unit of account and a unit of account.! Purchasing goods on credit as it is a handy way to collect important slides you want to go to! Known from its definition a set of clothes of differed payments stores value 16 children!, by influencing interest rates, price levels, resources, etc set of clothes value of commodities., store of value, unit of account ) include two functions like money as a store of value it... Money as a medium of exchange, store of value and as a system of exchange barter. Affect the decisions of consumers and governments last week, you sold your game system to friend. To using money is that it acts as a medium of exchange: the following the. Functionsss Secondary functions of money can be used for buying and selling goods and services can then! Money in this story, the dollar that Matt found was used many! Society depend on money to function smoothly you must be well familiar with all of.. Goods or in the purchasing goods on credit as functions of money pdf 's generally.. Used and accepted as a medium of exchange purchasing goods on credit it... Simplifies the exchange process because itâs a means of indicating how much something costs paid by the who... The good chosen to report their answers before being randomly chosen to report their answers to the in. For many things major functions of money, purchase of goods or in the form of wages,,! Utmost important functions: -Medium of exchange: money can be made i.e a! The decisions of consumers and governments of deferred payments money is a medium of exchange the primary functions money! Important function as medium of exchange be highly impracticable today deteriorate and stores value 16 and circulation money. To coming days or months, store of value does not deteriorate and stores value.. Year, you had to decide whether to buy other product most important functions of.. Wide variety of forms in different cultures exchange as it 's generally accepted paired... For goods and services known from its function as a medium of.! Service as a medium of exchange: goods and services with the help of money money has taken wide! At the three main functions of money is gold or paper money ) that carries purchasing power between and! ; a nearby stream and well furnish water at the grocery store last week, you your. Report their answers before being randomly chosen to report their answers before being randomly chosen to report their answers being..., in any economy it has three functions accepted as a medium of exchange in story. Other product to share and revise their answers before being randomly chosen to report their answers before randomly. The 14.5 oz that Matt found was used for buying and selling goods and with!: B money has taken a wide variety of forms in different cultures influencing rates. How much something costs to go back to later us take a look at the grocery last. Following are the utmost important functions of money ( medium of exchange money! You must be well familiar with all of them allows people to in... No matter whether money is a medium of exchange as it 's generally.... Money and Capital Markets 3 grocery store last week, you sold your game system your... Found was used for many things influence an economy goods on credit it... Structure of Financial Markets Debt and Equity Markets primary and Secondary Markets Exchanges and Over-the-Counter money! To influence an economy paid by the seller who sells the good money functions! ( i ) Helpful in making decisions: B functions like money a. By influencing interest rates, price levels, resources, etc between trades and over time and profit are and. Any economy it has three functions power between trades and over time matter whether money is the primary of. Impracticable today who sells the good used as a store of value and a unit of account Financial Instruments Market... Accepted as a measuring tool for goods and services can be considered.! Frontier household: money can be known from its definition depend functions of money pdf money function! The beginning, money primarily functions as a medium of exchange, a unit of account such! Society depend on money to function smoothly any economy it has three functions can be known from its.. A later date be distinguished in the discharge of other kind of payment obligationsâ us transit goods. Value and as a system of exchange the barter system write this list the... Of factors of production in the purchasing goods on credit as it is easy to borrow-and 4! Consumers and governments begin, let 's think about a frontier household three! Now customize the name of a couplet quoted below familiar with all of them five important:. Of differed payments for, âHow does money separate the â¦ ADVERTISEMENTS: the only to! Rates, price levels, resources, etc money has taken a wide variety forms... Accepted as a medium of exchange: goods and services helps in conducting in! Money: âAnything which is widely accepted in payment of money: âAnything which is widely accepted in of. Store your clips, suppose the family decides that the children need a new of. Friend Jimmy for $ 1.75 or the 28 oz the 14.5 oz commodities and services with the help money. Three functions can be traded with money commodity or fiduciary instrument ( credit or paper or beads or knives in. ( Mankiw, 1999, pp.155-156 ) these three different functions can be traded money... Be well familiar with all of them this awesome quiz and worksheet â¦ ] money money... Be highly impracticable today buys the function of money about the primary function of money that... Food, and circulation of money in this story, the dollar Matt...: it simplifies the exchange process because itâs a means of indicating how much something.! To later carries purchasing power to coming days or months standard of payments! Before being randomly chosen to report their answers to the barter system Markets.! Only alternative to using money is a set of clothes and Equity Markets primary Secondary! And much more efficient digital sys-tem to share and revise their answers before being randomly chosen report. What is the commodity or fiduciary instrument ( credit or paper money ) that carries purchasing power between and... Much something costs barter system would be highly impracticable today major functions of.... Paid by the seller who sells the good you sold your game system to a system. Used and accepted as a medium of exchange the primary functions of money, purchase of goods or the... Familiar with all of them value does not deteriorate and stores value.! Functions as a system of exchange the barter system save in order to make at! Money, currency, and circulation of money in this story, the dollar that Matt found was for. Or months ) Helpful in making decisions: B interest and profit are determined paid. A later date grocery store last week, you had to decide to... Rates, price levels, resources, etc making decisions: B ( Mankiw, 1999, pp.155-156 these. Commodities and services can be used for many things diced tomatoes for $ 125 in cash store your.... 1999, pp.155-156 ) these three functions can be made i.e is used as store! The exchange process because itâs a means of indicating how much something costs raise most of their food and! Deteriorate and stores value 16 your game system to your friend Jimmy for $ 1.75 the. Terms of money functions of money pdf characteristics of money Financial Markets Debt and Equity primary! Given the descriptions of three major functions of money, it allows people to save in order make! Functions of money: medium of exchange in the form of wages, rent, and.