importance of money in economy

If money goes on losing its stability of value, it will not be accepted as money. This means that in case of increase the value of money will be to the diminishing power of purchase. Production, distribution, and consumption are influenced to a great extent by prices, and prices are measured in money. This is great help in my social studies subject. The name “Juno” may derive from the Etruscan goddess Uni (which means “the one”, “unique”, “unit”, “union”, “united”) and “Moneta” either from the Latin word “monere” (remind, warn or instruct) or the Greek word “moneres” (alone, unique). Representative money may or may not be converted into full-bodied money. Even though the country faced great depression in 1930 and subprime mortgage crisis in 2008, it was able to regain its economic stability magically. It is well packed. Americans are known for a lot of things, but saving isn't one of them. Part of Springer Nature. Thus, it can be seen that commodity money is of two types i.e., metallic and non-metallic. Different economists have classified money in different forms. Ano ang mga kasabihan sa sa aking kababata? By this, he refers to the functions of money. When there are high rates of inflation, one unit of currency–for example, one U.S. dollar–is not capable of purchasing the same amount of goods as in a prior period. Those who saved also invested. Money assumes so many forms in real life that it is difficult to identify what constitutes money and what not. Reserve Bank of India and Govt, of India have an authority to issue currency which is accepted as a form of money in India. Several economists are of the opinion that money is responsible for economic instability in capitalist economies. Plagiarism Prevention 5. The solution of such problem has been found out on the following three consecutions: Whatever value becomes prevalent in the wholesale market is usually taken as wholesale value. 329–44. This would eliminate the use of cheques and reduce the need for currency. Paper money comprises bank notes and government notes which circulate without difficulty. This money is recorded as credit to the account of the bank’s customer which can be withdrawn by him on his/her wish by cheques. Money is an active agent of an economic system. A deflationary spiral is a downward price reaction to an economic crisis leading to lower production, lower wages, decreased demand, and still lower prices. For example, National Savings Deposits, Building Society Deposits and other similar deposits are not money because they are not generally acceptable in paying debt; these, however, could be easily and quickly exchanged for money without any loss or with minimum loss. Functions of Money in the Modern Economic System Introduction. Question: Why is the U.S. Dollar an internationally accepted money? The intrinsic value of the representative money is less than its face value. This service is more advanced with JavaScript available, Monetary Theory and Practice Fiduciary optional money is non-legal tender money as it is generally accepted by the people in final payments. And for performing the other two functions—that is, to be used as a store of value and standard of deferred payment—money should have stability of value.

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