Money

MONEY

Made by : Rishabh jain

WHAT IS MONEY

• Money is any good that is widely used and accepted in transactions involving the transfer of goods and services from one person to another.

FUNCTIONS OF MONEY

Medium of exchange : • Medium of exchange facilitates transactions. • Buyers uses it for purchases

and sellers accept it.

STORE OF VALUE :•In order to be a medium of exchange, money must hold its value over time; that is, it must be a store of value.Money may not even be the best store of value because it depreciates with inflation. However, money is more liquid than most other stores of value because as a medium of exchange, it is readily accepted everywhere.

Unit of account:

•A common unit for measuring the value of every good or service.

• Money can be used as a means to compare the values of goods and services•You can use the monetary value assigned to a specific good or service to compare it to one offered by a different provider.

STANDARD FOR DEFERRED PAYMENTS:

•An agreed unit of measure that enables people to contract for future payments and receipts.

CHARACTERISTICS OF MONEY:

Durability :Durability means that the money must be able to withstand being used repeatedly.

PORTABILITY:• Portability means that individuals are be able to carry money with them and transfer it easily to other individuals.

DIVISIBILITY:• Divisibility means that the money can easily be divided into smaller units of value.

UNIFORMITY:• Uniformity means that all version of the same denomination of currency must have the purchasing power.•As an example, a 2005 $2 bill will still buy $2 worth of goods or services today.

ACCEPTABILITY :• Acceptability means that everyone must be able to use the money for transactions.

SPECIALISATIONThe condition in which resources are primarily devoted to specific tasks.

Not only individuals specialize but also,

•Countries

•Firms

• Workers

ADVANTAGES AND DISADVANTAGES OF SPECIALISATION :

Increase in output and productivity

ADVANTAGES DISADVANTAGES

Continuity of supply

Increase in Profit and reduced costs

Increased efficiency

Increase in export revenue

Globally competitive

Fashion change

There will be loss if demand decreases

Greater cost of training workers

Technological breakdown may reduce or stop the production

Less flexible due to specializing only in specific task

The division of labor occurs where production is broken down into many separate tasks.

DIVISION OF LABOUR

PROS AND CONS OF DIVIDION OF LABOUR:

More goods and services can be produced

Full use is made of everyone’s ability

Time is saved

It allows the use of Machinery

Work becomes boring

Workers may feel alienated

Products are all the same

People become too dependent on each other

Higher productivity May lose job if product is no more demanded in market