$Money$Made By:Ashutosh Goel, 9E, Economics, 9B5

Definitions Related to Money:Money (money supply)-anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept. Money supply is the total amount of money available in the economy. (stock)Wealth-the total collection of pieces of property that serve to store value (stock)Income-flow of earnings per unit of time (flow).Stock- the goods or merchandise kept on the premises of a shop or warehouse and available for sale or distribution.Flow- a steady, continuous supply of something.

Functions of Money:Medium of Exchange-promotes economic efficiency by minimizing the time spent in exchanging goods and services. Facilitates specialization and division of labor. A good medium of exchange:Must be easily standardizedMust be widely acceptedMust be divisibleMust be easy to carryMust not deteriorate quicklyUnit of Account-used to measure value in the economy: assets, goods, services.Store of Value-used to save purchasing power; allows intertemporal substitution of income.Standard of deferred payment- Astandard of deferred paymentis the accepted way, in a givenmarket, to settle adebt a deferred payment" is not as widely used as other terms for functions of money, though it is distinguished in some works.

History of Money:

History of Money

History of Money and its Evolution of the Payments System:Commodity Money: Gold, Silver, other precious metals, certain stones, Cigarettes, etc. Commodity money consists of objects that have value in themselves as well as value in their use as money.Representative money: is an item such as a token or piece of paper that has no intrinsic value, but can be exchanged on demand for a commodity that does have intrinsic value, such as gold, silver, copper, and even tobacco.Fiat Money: inconvertible paper money made legal tender by a government decree.Checks:Electronic Payments: E payment is a subset of an e-commerce transaction to include electronic payment for buying and selling goods or services offered through the InternetE-money: is the money balance recorded electronically on a stored-value card.Phone money: money transfer from one phone to another.

Two videos on the History and the Evolutions of Money:

Video 1Video 2

BArTER SYSTEM:Abarter systemis an old method of exchange. Thissystemhas been used for centuries and long before money was invented. People exchanged services and goods for other services and goods in return.Today, bartering has made a comeback using techniques that are more sophisticated to aid in trading; for instance, the Internet. In ancient times, this system involved people in the same area, however today bartering is global.Bartering doesn't involve money which is one of the advantages. You can buy items by exchanging an item you have but no longer want or need. Generally, trading in this manner is done through Online auctions and swap markets.

Advantages and Disadvantages of Barter System:AdvantagesThe problems of international trade, such as, foreign exchange crisis, adverse balance of payments, do not exist under barter system.No money involved.Personal and natural resources are ideally utilised to meet the needs of the society without involving any wastage.There is no question of over or under-production, under the barter system since goods are produced just to meet the needs of the society.The economic power is not concentrated at one particular place in barter system because people do not gather wealth.

DisadvantagesIn the barter system it is difficult to divide and sub-divide goods. Possibility of exchange his good for only one good not for two or more.The value of the goods cannot be distributed equally as there were no measure during that period.In barter system the goods were limited. Barter system was lead only to lower level development.Barter system was good when needs were limited. Needs of man were increased but the supply of goods were not enough to satisfy mans needs.A lot of difficulty in storage value. Barter system cannot exchange goods for services.

Characteristics of good money:1.) Portability It should be easily transported from one place to another, even in bulk.

2.) Acceptability It should be accepted throughout the general region.

3.) Durability It should be able to withstand thousands of exchanges through its lifetime before it is recycled to produce new money. If durability is a problem, more money will be used to produce more money.

4.) Divisibility It should be able to offer exact amounts of change after a transaction. This is the reason why we have smaller banknotes and coins to buy goods that are not exactly worth certain amounts.

5.) Scarcity It should be scarce as too much of it may cause it too become fiat money. Fiat money refers to when money looses its money due to too much of it. This explains how precious and valuable items are not so commonly seen.

6.) Recognisability- money should be easy to recognize .

7.) Malleability - money should be Malleable so that it could be made into new money.

8.) Uniformity - It means that All version of the same denomination of currency must have the same purchasing power so that very denomination must be in uniform.

Works Cited: MLA WAYBeattie, A.Beattie, Andrew. "The History Of Money: From Barter To Banknotes | Investopedia".Investopedia. N. p., 2007. Web. 27 Dec. 2015.Google.co.inGoogle.co.in,. "E Money - Google Search". N. p., 2015. Web. 27 Dec. 2015.Google.co.inGoogle.co.in,. "Google". N. p., 2015. Web. 27 Dec. 2015.Google.co.inGoogle.co.in,. "Commodity Money - Google Search". N. p., 2015. Web. 27 Dec. 2015. Google.co.inGoogle.co.in,. "Intrinsic Value - Google Search". N. p., 2015. Web. 27 Dec. 2015.

Google.co.inGoogle.co.in,. "Characteristics Of Good Money. - Google Search". N. p., 2015. Web. 27 Dec. 2015.YouTubeYouTube,. "The Story Of Money". N. p., 2015. Web. 27 Dec. 2015.YouTubeYouTube,. "Barter - Trading - Comical But So True- Hosted By The Barter Corp.". N. p., 2015. Web. 27 Dec. 2015.Pbs.orgPbs.org,. "The History Of Money". N. p., 2015. Web. 27 Dec. 2015.WikipediaWikipedia,. "History Of Money". N. p., 2015. Web. 27 Dec. 2015.

Thank you!!!