Money originated from the Latin word 'MONETO' and can be defined as any commodity that is generally accepted for exchange and as a measure of value. The primary functions of money are as a medium of exchange to purchase goods and services, and as a measure of value to compare the worth of different commodities. Secondary functions include acting as a standard for deferred payments, a store of value for present and future needs, and allowing the transfer of purchasing power across locations.
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I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
For Order Online:
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I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
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1) Statement to Quantity Theory of Money
2) Graph illustration and Pictorial description of QTM
3) Different Approaches to QTM
4) Fisher's Transaction Approach Description
5) Assumptions of Fisher's Transaction Approach
6) Conclusion
The classical doctrine—that the economy is always at or near the natural level of real GDP (full employment)—is based on two firmly held beliefs:
The assumption of the full employment of labour and other productive resources
Belief that prices, wages, and interest rates are flexible.
Keynesian Theory
1. Describe the four functions of money, using the U.S. Dollar to pr.pdffathimahardwareelect
1. Describe the four functions of money, using the U.S. Dollar to provide an example of how
dollars serve each function.
2. First Bank has cash reserves of 200,000 loans of 800,000 and deposits of 1,000,000.
If the bank maintains a reserve requirement of 12 percent, what is the largest loan it can make?
What is the maximum amount by which the money supple can be increased as a result of First
Bank’s new loan?
Solution
1. Money is anything which is generally acceptable as a medium of exchange. Functions of
money are:
a) Medium of Exchange: It means that money acts as a medium for the sale and purchase of
goods and services. In the absence of money, goods were exchanged for goods. This required
double coincidence of wants. Accordingly, an exchange was difficult, and therefore limited. The
introduction of money has separated the acts of sale and purchase: a double coincidence of wants
is no longer required. Dollar is directly used to purchase various goods and services in the
market.
b) Measure of Value or Unit of Value: Money serves as a measure of value in terms of unit of
account. Unit of account means that the value of each good or service is measured in the
monetary unit. Measurement of value was very difficult in the barter system: one good was
valued in terms of the other. There was no common unit of value. An introduction of money has
removed this difficulty. Now, each good is valued in terms of money. Value of each good like
car is valued in dollar terms i.e. $ 200,000.
c) Standard of deferred payments: Deferred payments refer to those payments which are made
sometimes in the future. When we borrow money from somebody, we have to return both the
principal as well as interest amount. It is difficult to make such transactions in terms of goods
and services. Money performs this function most effectively.
c) Store of Value: Store of value implies store of wealth. Storing wealth has become
considerably easy with the introduction of money. Stored wealth is a source for future
investment. It was not convenient to store value in the barter system of exchange because goods
tend to wear out or perish. On the other hand, it is convenient to store value in terms of money
because money has the merit of general acceptability, value of money remains relatively stable
compared to other commodities. Dollar can be stored for future use without any difficulty.
d) Transfer of Value: Money also serves as a convenient mode of transfer of value. Goods are
purchased from far-off places both for consumption as well as investment..
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
For Order Online:
Whatsapp: +923452502478
Portfolio Link: https://blueprismacademia.wordpress.com/
Email: arguni.hasnain@gmail.com
Follow Me:
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Instagram : arguni.hasnain
Facebook: arguni.hasnain
1) Statement to Quantity Theory of Money
2) Graph illustration and Pictorial description of QTM
3) Different Approaches to QTM
4) Fisher's Transaction Approach Description
5) Assumptions of Fisher's Transaction Approach
6) Conclusion
The classical doctrine—that the economy is always at or near the natural level of real GDP (full employment)—is based on two firmly held beliefs:
The assumption of the full employment of labour and other productive resources
Belief that prices, wages, and interest rates are flexible.
Keynesian Theory
1. Describe the four functions of money, using the U.S. Dollar to pr.pdffathimahardwareelect
1. Describe the four functions of money, using the U.S. Dollar to provide an example of how
dollars serve each function.
2. First Bank has cash reserves of 200,000 loans of 800,000 and deposits of 1,000,000.
If the bank maintains a reserve requirement of 12 percent, what is the largest loan it can make?
What is the maximum amount by which the money supple can be increased as a result of First
Bank’s new loan?
Solution
1. Money is anything which is generally acceptable as a medium of exchange. Functions of
money are:
a) Medium of Exchange: It means that money acts as a medium for the sale and purchase of
goods and services. In the absence of money, goods were exchanged for goods. This required
double coincidence of wants. Accordingly, an exchange was difficult, and therefore limited. The
introduction of money has separated the acts of sale and purchase: a double coincidence of wants
is no longer required. Dollar is directly used to purchase various goods and services in the
market.
b) Measure of Value or Unit of Value: Money serves as a measure of value in terms of unit of
account. Unit of account means that the value of each good or service is measured in the
monetary unit. Measurement of value was very difficult in the barter system: one good was
valued in terms of the other. There was no common unit of value. An introduction of money has
removed this difficulty. Now, each good is valued in terms of money. Value of each good like
car is valued in dollar terms i.e. $ 200,000.
c) Standard of deferred payments: Deferred payments refer to those payments which are made
sometimes in the future. When we borrow money from somebody, we have to return both the
principal as well as interest amount. It is difficult to make such transactions in terms of goods
and services. Money performs this function most effectively.
c) Store of Value: Store of value implies store of wealth. Storing wealth has become
considerably easy with the introduction of money. Stored wealth is a source for future
investment. It was not convenient to store value in the barter system of exchange because goods
tend to wear out or perish. On the other hand, it is convenient to store value in terms of money
because money has the merit of general acceptability, value of money remains relatively stable
compared to other commodities. Dollar can be stored for future use without any difficulty.
d) Transfer of Value: Money also serves as a convenient mode of transfer of value. Goods are
purchased from far-off places both for consumption as well as investment..
Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio economic context.
2. The word money is being derived
from the Latin word ‘MONETO’.
Money can be defined as any
commodity that is generally
accepted as a medium of exchange
and a measure of value.
3. Functions of Money
• Primary Functions:
Medium Of Exchange: The fundamental
role of money is to serve as a medium of
exchange . A consumer can purchase any
commodity or service with help of
money.
4. Measure of Value : The value of
all goods and services is
expressed in terms of money . It
helps to compare value of all
commodities . Every country has
a standard money or a monetary
unit in terms of which values are
expressed and measured which
is known as currency such as
dollars, pounds, yen etc
5. Secondary Functions:
a) Standard Of Deferred
Payments : Future Payments are
termed as deferred payments.
Deferred payments are possible
only because of money . Money
makes possible the credit
transactions to happen . Money
acts as a standard of deferred
payments.
6. (b) Store of Value : Money
works as a store of value along
with satisfaction of present
wants , provisions for future
wants is equally important . It
serves as a store of value
because money has purchasing
power .
7. c) Transfer of Values : Today
with the extension of trade
among various countries and
organizations ,it becomes
necessary to transfer
purchasing power from one
place to another.