Money and Its Evolution: Money and Banking, Evolution of Money

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Money is anything which is accepted as a medium of exchange, measure of value, store of value and means for standard of deferred payment.

Why We Need Money?

  • Barter exchange refers to exchange of goods for goods. An economy, where there is a direct barter of goods and services, is called barter economy or C-C economy.
  • Barter economy has a major drawback: β€œLACK of double coincidence of wants, standard of deferred payment, unit of account and store of value.”

Money and Banking

Illustration: Money and Banking

Various Stages- Evolution of Money

Illustration: Various Stages- Evolution of Money

The Functions of Money

Illustration: The Functions of Money

What Serves as Money?

  • Money today: Fiat money
  • Decreed as money by government
  • Little value as commodity
  • Maintains value - medium of exchange because people have faith that the issuer will stand behind it.
Illustration: What Serves as Money?

✍ Manishika