a presentation on money

8/13/2019 A Presentation on Money

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BARTER SYSTEMO Means direct exchange of goods and

services

O

Refers to exchange of goods without theuse of money

O For example: Wheat may be exchangedfor cloth, house for horses, etc.

O Economy based on such system is known

as barter economyO Was in existence in early stages of man


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Difficulties in Barter SystemO Lack Of Double Coincidence of Wants of

Exchange

O Lack of Common Measure of ValueO Lack of Divisibility

O Problem of Storing Wealth

O Lack of Standard of Deferred Payment

O Lack of Specialization


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It is because of the abovementioned difficulties of

barter system that money was

invented and some kind ofmonetary exchange wasevolved in every society.


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Meaning of MoneyO According to Walker, Money is what

money does.

O In the words of D.H. Robertson, Moneyis a commodity which is used to denote

anything which is widely accepted in

payments for goods or in discharge of

other kinds of business obligations.


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Meaning of MoneyO Crowthersdefinition: Anything that is

generally accepted as a means of

exchange and at the same time acts as ameasure and store of value.


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Features of MoneyO Money possesses general acceptability.

O It is a medium of exchange.

O It measures value of all commodities andservices.

O It is the most liquid form of assets.

O Money is a means and not an end in itself.

O Durability.


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Classification of Money

Money

Full bodiedmoney

Representativemoney

Credit money


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CLASSIFICATION OF

MONEYFull Bodied Money

Gold coins

Silver coins

Representative Money

Paper money

Credit Money Token coins

Promissory Notes

Credit and Debit cards


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FUNCTIONS OF MONEYFunctions of money

Primary Functions

Medium of Exchange

Measure of Value

Secondary Functions

Standards of DeferredPayments

Store of Value

Transfer of Value

Contingent Functions

Distribution ofNational Income

Maximization ofSatisfaction

Basis of Credit

Productivity of Capital


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In short, the main functions of moneycan be summed up as under:

Money is a matter of functions four.A medium, a measure, a standard, a

store.As this does not complete the picture,

we may add transferability more.


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SUPPLY OF MONEYO Refers to the total stock of money which is

in circulation in an economy at a given

point of time.O Implies the total stock of money held by

public (individuals, business firms and

institutions) excluding the state treasury,

central bank and commercial banks

because of these being money creating

agencies.


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SUPPLY OF MONEYO Money is a stock as well a flow concept.

O When money supply is viewed at a given

point of time, it is a stock.O Money supply is the quantity of money

held by the public at a particular point of

time.

O When money supply is viewed over aperiod of time, money supply becomes a

flow concept.


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SUPPLY OF MONEYO Money can be spent several times during

a given period, passing from one hand to

another.O The average number of t imes a un it of

money c i rcu lat ing from one hand to

another in the process of spending

du ring a given year is cal led as the

velocity of circulation of money.


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COMPONENTS OF MONEY

SUPPLY

Traditionalviewpoint

Modernviewpoint


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Traditional

viewpoint

Modern

viewpoint


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MEASURES OF MONEY

SUPPLY IN INDIAO Based on two fundamental functions of

money, viz.,medium of exchange and

store of value, the Reserve Bank of Indiahas adopted four measures of money

supply expressed as M1, M2, M3 and M4


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MEASURES OF MONEY SUPPLY

AS GIVEN BY THE RBI C (Currency) +

DD (Demanddeposits) +

OD (OtherDeposits)

M1 =

M1 + SavingDeposits withpost officesavings banks

M2 =

M3 = M1 + TimeDeposits withbanks

M3 =

M3 + Total PostOffice Deposits(Excluding

National SavingsCertificates)

M4 =


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THANK YOU !!!!Presented By:

Krati Daga

Nikhil TakalkarSneha Motlani

Varun Rijhwani

a presentation on money

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