Production, distribution, and consumption are influenced to a great extent by prices, and prices are measured in money. These four functions of money have been summed up in a couplet which says: Money is a matter of functions four, a medium, a measure, a standard and a store. Just as we use yards and meters for measuring length, and pounds for measuring weights, we use money for measuring the value of goods. With the help of money, people can store surplus purchasing power and use it whenever they want. Financial Operations Control and Analysis The Bureau of Financial Operations Control and Analysis fulfills the Commissioner's responsibilities as joint custodian, along with the Office of the State Comptroller, for the State's General Checking Account, Common Retirement System Fund; Labor's Unemployment Insurance Benefit, Occupational Training and as sole custodian for more than 100 accounts on New York State Public Authorities such as: The State Insurance Fund, Workers' Compensation Board, Dormitory Authority amongst others.
Medium of exchange: value for the use of factors of production, make transaction process easier. If I work today and earn 25 dollars, I can hold on to the money before I spend it because it will hold its value until tomorrow, next week, or even next year. If money had been used, the seller could then use it to buy whatever he wanted, whether it is wheat or something else—now or in future. However, as a system of exchange the barter system would be highly impracticable today. Meaning of Money D2007, 09; A2004.
The spot exchange rate refers to the current exchange rate. Generally, economists have defined four types of functions of money which are as follows: i Medium of exchange ii Measurement of value; iii Standard of deferred payments iv Store of value. . Moreover, when people save money, they get the assurance that the money saved will have value when they wish to spend it in the future. Red blood cells surge through veins and arteries providing the body with the precious oxygen that sustains life.
It is, therefore, highly important that the value of money should be stable. There are 3 C's of processing. Now paper is used as money. Where money is not exchanged for a product or service, usually some other kind of deal is made but the function of money is simply an idealistic object which can be traded. This is why diamonds, works of art, or real estate are not suitable as money. Because I know others will accept it, I am comfortable accepting it.
However, for most of history, almost all money was commodity money, such as gold and silver coins. It acts as a store of value. Yet in the short run—for day-to-day purposes—money has sufficient stability of value to serve quite well as a store of value. Even forms of money that share these function may be more or less useful based on the characteristics of money. Money in the form of currency has predominated throughout most of history.
Money supply: In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time. Without a measure of value there can be no pricing process. Only money is such a commodity in whose form accounts of deferred payments can be maintained in such a way so that both creditors and debtors do not stand to lose. The likelihood of a double coincidence of wants, however, is small and makes the exchange of goods and services rather difficult. Walker has said that money is that which money does. The monitory unit of account helps to measure the value of goods and services. Money has taken different forms through the ages; examples include cowry shells in Africa, large stone wheels on the Pacific island of Yap, and strings of beads called wampum used by Native Americans and early American settlers.
When we express the value of a commodity in terms of money, it is known as price. Then, I can take the money I earn and pay for a variety of goods and services. Lending and borrowing, therefore must take place in terms of a commodity which will, reasonably speaking, keep its value stable over time. Money is a means of making payments for the goods and services purchased. The most important functions are given in the form of a couplet quoted below. It is a unit of account. Money would perform the store of value function properly if it remains stable in value.
Since Bob is not the only customer Margie has, and Margie isn't Bob's only customer, they need a unit of account that works for everyone in the economy. Gold is excellent for such purposes. On the other hand, due to general acceptability of money, future payments are expressed in terms of money. By serving as a very convenient medium of exchange money has made possible the complex division of labour or specialization-in the modern economic organisation. It has facilitated trade and has made possible the complex division of labour and specialisation of the modern economic system. Deposit money and currency are money in the sense that both are acceptable as a means of payment. Money is best kept as a store of value to be used as and when need arises.
There is no necessity for a double coincidence of wants in a money economy. M2 is a broader classification of money than M1. Money being the most liquid of all assets has the advantage that an individual or a firm can buy with it anything at any time. Economists use M2 when looking to quantify the amount of money in circulation and trying to explain different economic monetary conditions. Every day, millions of transactions take place in which payments are not made immediately.