USA Grammar

Money

Table of Contents

Money is anything that is generally accepted as payment of debts, services and goods. Money is an abstraction, concept, idea or token instances of which are the physical coins or bills that are traded and carried. Money has several functions. One is that is acts as a unit of deferred payment which means that money acts as the accepted way to settle debts in a given market. Money is a medium of exchange which is an intermediary medium in trade. Thirdly money is a unit of accounts which is the standard monetary unit of measurement in markets costs and value of services, goods or assets. Lastly money is acts as a store of value in which forms such as currency, or money or a commodity like gold or financial capital is able to be saved and retrieved at later time (Mishkin, 2007, p 8) Money was in the past a commodity money. Today, money system is based on fiat money.

This form has no intrinsic use value as a physical commodity. The value is instead declared by government as a legal tender that must be accepted and used as form of payment within a country. The supply of a country’s money consists of currency which include coins and banknotes . Fiat money or currency is money whose value is not derived from any intrinsic guarantee that can be changed into a valuable commodity such as gold. It has value only by government fiat. Contemporary money which includes coins, and notes are durable, recognizable, portable, divisible, scarce, homogeneous and acceptable. This are the characteristics which makes contemporary money easy and efficient to use as compared to traditional medium of exchange such as salt, cattle , a animal pelts and gold.

Reference

Mishkin,S. (2007). The Economics of Money, Banking, and Financial Markets, Boston: Addison Wesley. p. 8.

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