Crowther describes money as anything which is generally accepted as a medium of exchange and something that also helps in the measurement and also in storing the value.
Hawtrey told us that Money is the same as those concepts which, for example, an umbrella or a teaspoon, can be defined once we have used it or by the purpose they serve.
Robertson defined money as anything that is extensively accepted at the time of payments for goods or at the time of discharge of any kind of business job.
Now let us look at various kinds of money, which each and every student must understand so that their concepts are clear, and they get effective assignment help:
● Token money:
Money whose face value exceeds its intrinsic or metallic value is known as token money.
● Fiat money:
Money that is issued on the order of the government is known as fiat money.
● Convertible money:
Convertible money refers to those that can be converted to precious metals like gold and silver.
● Non-convertible money:
Money that cannot be converted into precious metals like gold and silver is known as non-convertible or nonconvertible money.
A legend refers to a promise made by money to its bearer to pay a specific sum of money to a person holding it.
● Legal tender:
All currency notes and coins that have the legal sanctions and legal backing of the government are issued under a law that cannot be rejected, are called legal tender. Being a legal tender, a person has to accept it and cannot reject it.
Legal actions would be taken against a person who refuses to accept it as a medium of exchange and for settling debts. Further additions to this concept of legal tender, that needs to be focused on while referring for help in homework, are:
● Limited legal tender:
Limited legal tender is a legal tender which has to be accepted up to a certain limit and beyond that limit people cannot be forced to accept it, for settling debts and making payments. For instance, all currency notes and coins under rupees 10 are known as limited legal tender as per the latest RBI (Reserve Bank of India) norms.
● Unlimited legal tender:
Unlimited legal tender is a legal tender and there is no maximum limit for people to accept it for settling debts and making payments. For instance, all currency notes above rupees 10 are said to be unlimited legal tender as per latest RBI norms.
● Deposit or bank money:
It is that amount of money that is issued on the order of the government based on which cheques are drawn. It is legal tender. It is totally upon the will of a person whether to accept it or to reject it.
Cheques are known as non-negotiable instruments for banks for making payments and transfers equal to the amount mentioned to a person. In addition, to gain effective assignment help, we need to focus on the functions of money: –
● Primary functions:
This category includes those functions which are essential and fundamental. These functions are necessary to be performed by money in every economy and under all circumstances:
1. Medium of exchange:
Money is said to be a medium of exchange since it is generally and widely accepted as it is a legal tender. Money is needed in purchasing and selling commodities at convenient prices.
2. Measure of values:
As we measure kilograms in weights, distance in kilometers, similarly prices prevailing in the market can be conveyed in terms of money for all goods and services since money is a common measure of value or unit of account.
● Secondary functions:
Secondary functions have those functions that are derived from the primary functions. They are as follows:
1. Standard of deferred payment:
Money is said to be the standard of deferred payment in the sense that it can be used to make future payments since money is a legal tender and is generally and widely accepted as a means of exchange. Future payments can be made in a sense of salaries, pension, insurance premium, etc.
2. Store of value:
Money can be useful in storing value since people can keep their wealth in the form of money which they can use in the future as money is generally and widely accepted. Storing of value in the form of bonds, shares, debentures, etc.
3. Transfer of value:
Money helps in transferring value from buyer to seller in form of prices. Sales and purchases can only be made possible when value is being transferred from one person to another. This value is shown as price and is measured in terms of money.
● Contingent functions:
Different kinds of economic entities like producers, consumers, etc., are assisted by money so that they could arrive at the economic decision that relates to production, consumption, etc. they are as follows:
1. Maximization of utility:
The aim of the rational consumer is to maximize his total utility with prices. The utility and prices are measured in terms of money. Hence, money is useful in equalizing marginal utility.
2. Employment of factor inputs:
The aim of profit-maximizing producer is to maximize marginal productivity of factors with its prices (remunerations) as the rate of remunerations such as wages and salaries are expressed in terms of money.
3. Distribution of national income:
Money gives help in distributing national income to different factors of productions as rewards to a different factors of production such as land – rent, labor – wages and salaries, capital – interest and entrepreneur’s profit are demonstrated and paid in terms of money.
4. Basis of credit system:
Commercial and business activities are highly dependent upon the credit system of the country. Money gives backbone to all these credit systems. All instruments of money like credit cards, debit cards, promissory notes, cheques are not operable in the absence of money.
This makes it clear, the importance of money and how it facilitates the effective functioning of our economy. These were a few basic points that must be taken note of by the students while they are reading for help in homework as they would also help us to know the topic properly.
Overall, money has taken many forms over time, but it consistently serves three functions: as a store of value, a unit of accounting, and a medium of exchange.