SCHOOL OF COMMERCE

MACRO ECONOMICS PRESENTATION

MONEY &

Its FunctionsBy

Pratik ShuklaB-com

2nd semesterR16BC102

Submitted toDr. Harini B

Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context,[or is easily converted to such a form.[citation needed] The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, sometimes, a standard of deferred payment. Any item or verifiable record that fulfills these functions can be considered as money.Money is historically an emergent market phenomenon establishing a commodity money, but nearly all contemporary money systems are based on fiat money. Fiat money, like any check or note of debt, is without use value as a physical commodity. It derives its value by being declared by a government to be legal tender; that is, it must be accepted as a form of payment within the boundaries of the country, for "all debts, public and private".The money supply of a country consists of currency (banknotes and coins) and, depending on the particular definition used, one or more types of bank money (the balances held in checking accounts, savings accounts, and other types of bank accounts). Bank money, which consists only of records (mostly computerized in modern banking), forms by far the largest part of broad money in developed countries.[

MONEY

Barter systemBarter is a system of exchange where goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. It is distinguishable from gift economies in many ways; one of them is that the reciprocal exchange is immediate and not delayed in time. It is usually bilateral, but may be multilateral (i.e., mediated through a trade exchange) and, in most developed countries, usually only exists parallel to monetary systems to a very limited extent. Barter, as a replacement for money as the method of exchange, is used in times of monetary crisis, such as when the currency may be either unstable (e.g., hyperinflation or deflationary spiral) or simply unavailable for conducting commerce.

Functions of money

Measuring ValueMedium of exchange

Standard of deferred paymentStore of valueTransfer of value

Fiat currencies are the generally accepted mediums of exchange. Their most important and essential function is to provide a 'measure of value] Hifzur Rab has shown that the market measures or sets the real value of various goods and services using the medium of exchange as unit of measure i.e., standard or the yard stick of measurement of wealth. There is no other alternative to the mechanism used by the market to set, determine, or measure the value of various goods and services. Determination of price is an essential condition for justice in exchange, efficient allocation of resources, economic growth, welfare and justice. The most important and essential function of a medium of exchange is to be widely acceptable and have relatively stable purchasing power

Medium of Exchange

When money is used to intermediate the exchange of goods and services, it is performing a function as a medium of exchange. It thereby avoids the inefficiencies of a barter system, such as the "coincidence of wants" problem. Money's most important usage is as a method for comparing the values of dissimilar objects

A unit of account (in economics is a standard numerical monetary unit of measurement of the market value of goods, services, and other transactions. Also known as a "measure" or "standard" of relative worth and deferred payment, a unit of account is a necessary prerequisite for the formulation of commercial agreements that involve debt.Money acts as a standard measure and common denomination of trade. It is thus a basis for quoting and bargaining of prices. It is necessary for developing efficient accounting systems

It should possess the following characteristics:1.Value common assets2.Common and accessible3.Constant utility4.Low cost of preservation5.Transportability6.Divisibility7.High market value in relation to volume and weight8.Recognisability9.Resistance to counterfeiting

While standard of deferred payment is distinguished by some texts, particularly older ones, other texts subsume this under other functions.[

A "standard of deferred payment" is an accepted way to settle a debt – a unit in which debts are denominated, and the status of money as legal tender, in those jurisdictions which have this concept, states that it may function for the discharge of debts. When debts are denominated in money, the real value of debts may change due to inflation and deflation, and for sovereign and international debts via debasement and devaluation.

Standard of deferred payment

Store of valueTo act as a store of value, a money must be able to be reliably saved, stored, and retrieved – and be predictably usable as a medium of exchange when it is retrieved. The value of the money must also remain stable over time. Some have argued that inflation, by reducing the value of money, diminishes the ability of the money to function as a store of value.

To act as a store of value, a money must be able to be reliably saved, stored, and retrieved – and be predictably usable as a medium of exchange when it is retrieved. The value of the money must also remain stable over time. Some have argued that inflation, by reducing the value of money, diminishes the ability of the money to function as a store of value.

Transfer of value

Money vs Sodexo

Sodexo (formerly Sodexho Alliance) is a French food services and facilities management company headquartered in the Paris suburb of Issy-les-Moulineaux. Sodexo is one of the world's largest multinational corporations, with 420,000 employees that represent 130 nationalities and are present on 34,000 sites in 80 countries.For fiscal year 2010 (ending August 2009) revenues reached 15.3 billion euros, with a market capitalization of 6.5 billion euros. Revenues by region represent 38% in North America, 37% in Continental Europe, 8% in the UK and Ireland, and 17% elsewhere.Sodexo serves many sectors, including private corporations, government agencies, schools from elementary through university, hospitals and clinics, assisted-living facilities, military bases, and correctional facilities. As of 2016 subsidiary Sodexo Justice Services operated 122 prison in eight countries, including 42 in the Netherlands, 34 in France, and others in Belgium, Italy, Spain, and Chile

Sodexo

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