Money

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Money

  1. 1. Money
  2. 2. GC UNIVERSITY FAISALABAD BS COMMERCE
  3. 3. What is money??? • Something which can be used as a medium of exchange and generally acceptable in every transaction. • The material thing which circulate in hand by hand and discharged by debt.
  4. 4. Characteristics of good money 1. Generally acceptable and circulate hand by hand. 2. Divisible and recognizable for transactions. 3. Storeable for long time and not perishable. Shoud be elastic and economical. 4. Must have stated value
  5. 5. Origen of money • The difficulties of barter system compelled people to originate money. the word money came from Latin word Moneta which means goodness
  6. 6. Kinds of Money • Commodity money • basic item used by most people • intrinsic value – value even if not used as money
  7. 7. Kinds of Money Good exchange for goods Precious metals Gold Coins Finally paper money Negotiable instruments
  8. 8. Measuring Money Supply • M1 – money serving as medium of exchange – coin, currency, checking deposits, travelers checks, NOW accounts, etc. • M2 – money serving as store of value – M1, plus – savings deposits, small time deposits (CDs <$100K), money market funds, overnight Eurodollar deposits • M3 – money serving as measure of value – M2, plus – large time deposits, Eurodollar time deposits, less liquid assets

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