6th Sem Kashmir University Money and banking economics 6th semester pdf file MCQ Download JK Crown

 

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Money has three functions:

1. Medium of exchange : A medium of exchange is any object that is generally accepted in exchange for goods and services. Money acts as a medium of exchange. As a result, money eliminates the need for barter , which is the exchange of goods and services directly for other goods and services, which requires a double coincidence of wants (a situation in which two people each want some good or service that the other person can provide).
2. Unit of account : Money serves as a unit of account , which is an agreed-upon measure for stating the prices of goods and services
3. Store of value : Money serves as a store of value , which is any commodity or token that can be held and exchanged later for goods and services. ⁽¹⁸⁾

Money Today

Fiat money refers to objects that are money because the law decrees or orders them to be money. Today’s fiat money consists of currency (the bills and coins that we use in the United States today) and deposits at banks and other depository institutions. Deposits are money because they can be converted into currency and because they are used to settle debts.

• Currency in a bank is not counted as money; only currency held by individuals and businesses in any form is counted money.
• Credit cards are not money — they are IDs that allow an instant loan.