7. Disadvantages of barter system
Lack of Double Coincidence of Wants:
Barter transactions can be possible only when
two persons desiring exchange of commodities
should have such commodities which are
mutually needed by each other.
Lack of Double Coincidence of Wants:
Barter transactions can be possible only when
two persons desiring exchange of commodities
should have such commodities which are
mutually needed by each other
For example if a person is having a cow that how
could he exchange it with cloths or food grain.
8. Lack of a Common Measure of Value:
The biggest problem in the barter exchange was
the lack of common measure of value i.e., there
was no such commodity in lieu of which all
commodities could be bought and sold. In such a
situation, while facilitating the exchange of a
commodity its value was to be expressed in all
commodities, such as one yard cloth is equal to ½
kilogram of potato etc.
Lack of Store of Value:
In a barter economy, the store of value could be
done only in the form of commodities. However,
we all know that commodities are perishable and
they cannot be kept for a long time in the store.
Because of this difficulty, the accumulation of
capital or store of value was very difficult .
9. Money is any good that is widely used and
accepted in transactions involving the
transfer of goods and services from one
person to another.
Money acts as an
intermediate in the exchange process,
it is called a medium of exchange.
10. ROBERTSON:- “ANY COMMODITY THATFULL FILLS
THE RESPONSIBILTYOF PAYMENTAND OCCUPATIONIS
CALLEDMONEY”
G.D.H.KAUL:- “ANY GOODSWHICH IS READILY
ACCEPTEDTOWRDSPAYMENTSAND CREDITIS CALLED
MONEY.”
KENT:- “ANY THINGWHICHIS READILY ACCEPTEDA
NEASUREOF VALUEDURINGTRANSACTIONIS CALLED
MONEY.”
11. RESERVE MONEY (M0):- CURRENCY IN
CIRCULATION+ DEPOSITS OF COMMERCIAL BANKS IN
RBI- LOANS GRANTED BY RBI TO THE GOVT. + ASSESTS
OF THE RBI ABROAD - IT IS THE MOST LIQUID STATE OF
MONEY WHERE IN THE ASSESTS COULD BE READILY
CONVERTED INTO MONEY.
(M1):- M0 + THE AMOUNT OF MONEY DEPOSITED BY
THE CUSTOMERS IN DIFFERNT BANKS IN DIFFERNT
ACCCOUNTS VIZ., SAVING, CURRENT RECURRING, TIME
DEPOSITS ETC.
(M2):- M1 + AMOUNT OF MONEY DEPOSITED BY THE
CUSTOMER IN THE POST OFFICE IN POSTAL ACCOUNTS
SUBJECT TO THE MAXIMUM LIMITS OF Rs.100,000.
(M3):- M1 +ALL TYPES OF THE TERM DEPOSITS +GOVT.
BONDS, SHARES DEBENTURES, SECURITIES ETC.
(M4):- M3 +ALL SORTS OF SAVING ACCOUNTS IN THE
POST OFFICE EXCEPT NATIONAL SAVING CERTIFICATES.
12. The use of money spans a large part of our
everyday life. In transactions, goods are being
bought and sold with use of money. In some
transactions, services are being exchanged
with money. When both parties have to agree to
sell and buy each others commodities this is
known as Double coincidence of wants. In
contract, in an economy where money is in use,
money by providing the crucial intermediate
step eliminates the need for double coincidence
of wants. Once he has exchanged his goods for
money, he can purchase other goods in market.
Since money as an intermediate in the
exchange process. It is called a medium of
13. • Value common assets
• Constant utility
• Low cost of preservation
• Transportability
• Divisibility
• High market value in relation to
volume and weight
• Recognisability
• Resistance to counterfeiting
14.
15. • Metallic Money:
• Metallic money refers to coins
made out of various metals like
gold, silver, bronze, nickel, etc. A
coin is a piece of metal of a given
size, shape, weight and fineness
whose value is certified by the
State.
16. • In the modern India paper money is used as
the mode of exchange
• In India the Reserve Bank Of India issues the
currency notes on the behalf of the govt.
• The law legalises the use of rupees as a
medium of payment that cant be refused in
setting a transaction in the all over the India .
No individual can legally refuses to take a
payment in the form of paper money issued by
the RBC
17. • Deposit money is the money which are deposited
in the bank
• Credit money refers to money that constitutes
future claims of a valuable item against an entity.
• The holder of the money can use it to purchase
goods and services; when the holder wants to, he
or she can redeem it to get the item by which it is
backed.
• Credit money is made of a material that has low
intrinsic value compared to the value it represents
when exchanged.
18. Modern forms of money is include currency-
including paper notes and coins. The modern
currency is without its own use. In India, the
reserve bank of India issues currency notes on
behalf of the central government. In India
rupee widely accepted as a medium of
exchange. It is accepted as a medium of
exchange because the currency is authorized
by the government of the country. No other
individual or organization is allowed to issue
currency.
