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Impact of money & quasi money on the economy of Pakistan
1. IMPACT OF MONEY &
QUASI MONEY IN
PAKISTAN ECONOMY
Respected Teacher: Amina Rizwan
2. Presented To: Prof Amina Rizwan
Presented By:
๏จ Umair Arshad
๏จ Marriam Gill
๏จ Samra Ahmed
๏จ Faiza Ramzan
๏จ Fraz Ali Subhani
3. Introduction:
Average annual growth rate in money and quasi money.
Money and quasi money comprise the sum of currency
outside banks, demand deposits other than those of the
central government, and the time, savings, and foreign
currency deposits of resident sectors other than the
central government. This definition is frequently called
M2; it corresponds to lines 34 and 35 in the
International Monetary Fund's (IMF) International
Financial Statistics (IFS).
Variables:
๏จ Independent Variables: Money and quasi money (M2)
๏จ Dependent Variable: GDP Growth Rate
4. Literature Review:
๏จ In modern literature, money is defined in various ways
some inclusive, other exclusive, of time and saving
deposits and some even inclusive of others liabilities of
nonbank financial intermediaries; and the demand for
money is determined by a host of variables. Milton
Friedman, defining money as currency held by the
public plus adjusted demand deposits and time deposits
of commercial banks postulates that the demand
function the price level, the rate of change of price
level, bond and equity yields, and a taste variables; and
he concludes that the demand for money is similar to
that for luxury goods.
5. Islamic Modes of Finance and the Role of
Sukuk
๏จ Gold, silver, and all quasi-money assets, since gain
in this exchange is riba. The objects of salam are
commodities (or services) that are normally
available in the market and can be specifically
defined in terms of quantity, and quality. The exact
date and place of delivery must be specified
By Abdel-Rahman Yousri Ahmad.
6. Medium of exchange:
๏จ When money is used to intermediate the exchange
of goods and services, it is performing a function as
a medium of exchange. It thereby avoids the
inefficiencies of a barter system, such as the
"double coincidence of wants" problem. (William
Stanley Jevons 1875)
7. Unit of account:
๏จ A unit of account is a standard numerical unit of
measurement of the market value of goods,
services, and other transactions. Also known as a
"measure" or "standard" of relative worth and
deferred payment, a unit of account is a necessary
prerequisite for the formulation of commercial
agreements that involve debt. (William Stanley
Jevons 1875)
8. Store of value:
๏จ To act as a store of value, a money must be able to
be reliably saved, stored, and retrieved โ and be
predictably usable as a medium of exchange when
it is retrieved. The value of the money must also
remain stable over time. Some have argued
that inflation, by reducing the value of money,
diminishes the ability of the money to function as a
store of value.(William Stanley Jevons 1875)
9. Standard of deferred payment:
๏จ While standard of deferred payment is distinguished by
some texts, particularly older ones, other texts subsume
this under other functions. A "standard of deferred
payment" is an accepted way to settle a debt โ a unit in
which debts are denominated, and the status of money
as legal tender, in those jurisdictions which have this
concept, states that it may function for the discharge of
debts. When debts are denominated in money, the real
value of debts may change due to inflation
and deflation and for sovereign and international debts
via debasement and devaluation. (William Stanley
Jevons 1875)
10. Measure of value:
๏จ Money acts as a standard measure and common
denomination of trade. It is thus a basis for quoting
and bargaining of prices. It is necessary for
developing efficient accounting systems. But its
most important usage is as a method for comparing
the values of dissimilar objects. (William Stanley
Jevons 1875)
12. Money
๏จ Money is any object or verifiable record that is
generally accepted as payment for goods and
services and repayment of debts in a particular
country or socio-economic context. The main
functions of money are distinguished as:
๏จ Any kind of object or verifiable record that fulfills
these functions can be considered money.
๏จ Money is historically an emergent market
phenomenon establishing commodity money, but
nearly all contemporary money systems are based on
fiat money.
13. Fiat money
๏จ Any check or note of debt is without intrinsic use
value as a physical commodity. It derives its value
by being declared by a government to be legal
tender. It must be accepted as a form of payment
within the boundaries of the country, for "all debts,
public and private" .Such laws in practice cause fiat
money to acquire the value of any of the goods and
services that it may be traded for within the nation
that issues it.
14. Quasi Money:
๏จ A term used to describe highly โliquid assetsโ other
than โcashโ that can be quickly exchanged for cash.
For examples of quasi money would include bank
account balances, Certificates of Deposit and
U.S.Treasury Bills. The amount of quasi money in
an economic is often used by
central bankers, economists and fundamental forex
traders to compute the current level of the money
supply in a country. It is also called near money.
15. Definition of Near Money:
๏จ An economics term describing non-cash assets that
are highly liquid, such as bank deposits, certificates
of deposit (CDs) and Treasury Bills. Central banks,
economists and statisticians may utilize near money
when determining the current money supply. Near
money refers to assets that can be quickly
converted into cash. It is also called quasi money
16. Regression Analysis:
๏จ Regression analysis is a statistical tool for the
investigation of relationships between variables.
Usually, the investigator seeks to ascertain the
causal effect of one variable upon another.
๏จ Regression techniques have long been central to the
field of economic statistics (econometrics)
17. Data Interpretation:
๏จ By applying statistical procedure to analyze facts
from this research..
๏จ Relationship of Money and Quasi money and its
impact or effect on GDP
18. Year GDP Growth Rate
Money and quasi money
(M2) as % of GDP
1998 2.550234294 47.1502314
1999 3.660132744 44.82025634
2000 4.260088011 38.59469838
2001 1.982484033 39.15125231
2002 3.224429973 43.25191223
2003 4.846320936 46.42524235
2004 7.368571358 48.36162239
2005 7.667304273 49.18651118
2006 6.177542036 44.55519367
2007 4.832817277 47.43290591
2008 1.701405465 43.54570483
2009 2.831658519 40.27346075
2010 1.606680858 41.13943884
2011 2.785944292 37.47580384
25. X Variable 1 Line fit Plot
0
1
2
3
4
5
6
7
8
9
Y
X Variable 1
X Variable 1 Line Fit Plot
Y
Predicted Y
26. Resources:
๏จ World Development Indicators
๏จ World Bank Groups
๏จ State Bank of Pakistan
๏จ World Bank
๏จ IMF
๏จ Pakistan Bauru Of Statistics
