Money

The Evolution of notes In earliest economies, turn relied upon trading products right away for an opposite(prenominal) products. This system is called BARTER. Barter is an expensive pith of exchange since it requires the persona COINCIDENCE OF WANTS. Two traders wipe out exactly what the other wants in exchange for their products. It was a natural evolution for grocery store place transactions, that to lower the apostrophize of exchange, funds would be created. hard cash anything that is generally authoritative in exchange for goods and services. Lessons learned almost m integrityy: funds should not be perishable, bulky, not substantially divisible, of standard quality, should have a low opportwholey cost and the value of funds should not fluctuate erratically (its toy out and demand bound prices) The Functions of M cardinaly are: mediocre of Exchange generally recognized as a means of payment Unit of Account a common social u nit for measuring the value of goods and services - a standard unit for quoting prices Store of Value - retains buying situation over date (money is a stock and income is a give ear) TYPES OF money Commodity Money anything that serves both as money and as a commodity. It also refers to paper money that is backed by a commodity (e. g. gold or silver). Token Money (e.g.

coins) - money whose face value exceeds the value of the material from which it is made. Seniorage the contour between the face value of money and the cost to tote up it. (The profit from issuing money.) Fiat Money Mo ney that is not redeemable for any commodity! ; the status as money is conferred by the government as legal tender (e. g. our federal Reserve Notes). Value of fiat money is determined by the willingness for it to be accepted in transactions. Value of money reflects its purchase power. Therefore, the value of money declines (increases) as the price level increases (declines). This is one reason the countries suffering extremely high inflation estimate typically have a...If you want to get a entire essay, order it on our website: OrderCustomPaper.com

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