Money And Banking
Money and Banking
Money:
Term that actually refers to two concepts: the abstract unit of account in terms of which the value of goods, services, and obligations can be compared; and anything that is widely established as a means of payment. Frequently the standard of value also serves as a medium of exchange, but that is not always the case.
The role of money in the society:
A first definition of money is to define money as the mean of exchange between individuals. In a capitalist economy, this is a too simple definition. The fundamental purpose of money is a way to distribute the ownership in the society. And, by a consequence, money is also used as a mean of exchange. Furthermore, it should be analyzed that money is also a social instrument which help to coordinate social relation between individuals.
Functions of Money:
Specific functions (mostly micro-economic)
?c Unit of account (abstract)
?c Common measure of value (abstract)
?c Medium of exchange (concrete)
?c Means of payment (concrete)
?c Standard for deferred payments (abstract)
?c Store of value (concrete)
General functions (mostly macro-economic and abstract)
?c Liquid asset
?c Framework of the market allocative system (prices)
?c A causative factor in the economy
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