MONEY. MONEY NATURE AND FUNCTIONS. MONEY HISTORY.

Money is used for buying or selling goods, for measuring value and for storing wealth. The most obvious function of money is as a medium of exchange. That means that we can use money to buy goods such as a pair of shoes, clothes, food products. Also, we use money to buy services, such as a haircut or car repairs. We exchange money for a service or a product. Money does more than allows us to buy things. Most of us have saved money. In fact, if you have money in your purse or pocket right now, you have saved money. Perhaps you are saving money until you get enough to buy a new TV set. So, money serves as a store ofvalue. In other words, we don’t have to run out and exchange money for goods or services the moment we get it. Instead, we can hold it as a power to buy something in the future. This is simply called saving. Money also serves as a measure of value. We can use the measure of value to gauge incomes, prices, wealth, and things like that.

Money by itself doesn’t do anything for us. We can’t eat it, nor can we wear it. It really has no value other than what can be bought with it. Money by itself does not determine our standard of living. Instead, it is the amount of goods and services over which we have control that determines our standard of living. Money is only the means that each of us uses to acquire those things, which, in turn, determine our standard of living.

The money economy of most societies in the world is based on coins and paper bills of one kind or another. A coin is a piece of metal, usually disc-shaped, which bears lettering, designs or numbers showing its value. Coins are made of metals. They are portable, recognizable, and divisible into larger or smaller units of value. Paper money is issued by governments in the form of bills, which are really “promises to pay”. Paper money is easier to handle and much more convenient in the modern world. Cheques and credit cards are being used increasingly.

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Date: 2015-01-29; view: 841