Money

Sep 27, 2021 News

Money is any verifiable physical object or usually accepted as payment for products and services and payment of debts, including taxes, in a certain country or social context. Money has been used since time immemorial. Today it is regarded as a universal standard of value by most people all over the world, regardless of race, religion, or sex. Money is seen to be a universal solvent in which payments are made between individuals, companies, governments and other financial institutions.

MONEY

It is a means of exchange in which goods are bought and sold in specific markets at specified prices on specific dates and it is a medium of deferred payment. Money facilitates trade by making transactions easy, convenient and flexible. Without money, trade would be very difficult, lengthy and arduous.

Money is the means of exchange that facilitates both savings and investment. A saving is the saving of potential resources or income from future transactions, for example, in the stock market, bonds, mutual funds, real estate, gold and so on. Investment is the increase of wealth from future transactions. Money, therefore, is not only a medium of exchange, but also a source of income and a guarantee of exchange and deferred payment.

Money facilitates exchange because it removes the risk involved in transactions. For example, to buy goods it is necessary to have some cash so that purchases are secured by actual goods on hand or available on credit in the bank. On the other hand, to sell goods it is necessary for a seller to have something that can be exchanged as a sort of guarantee for a loan (we will call this a loan note). In both cases, there are opportunities for deferral of transactions and automatic payments.

Money facilitates exchange because it removes the risks involved in creating the relevant goods (this is called capital structure), financing the production and marketing them and ensuring their delivery. The costs involved are called transaction costs. They include the costs of creating the goods, their distribution and their price. All the various distribution channels, for example, transportation, consumption goods produced and processed, raw materials and so on, have transaction costs. Moreover, if the production is done in different places, each place adds its transaction cost.

Money, then, is the general term that describes the general nature of exchange-trading in goods-for-services and the partial use-value of commodities (that is, the partial exchange value of the services or the partial use value of the commodities). Money is a medium of exchange, a store of value and a medium of investment. It is the general nature of the commodity market that determines the value of money and determines the interest rates that are charged on it. Money facilitates exchange by removing the risks and the transaction costs associated with production, trading and marketing of the relevant goods. As the prices of production change, the prices of money also fluctuate, and the general business cycle continues.