Money takes various forms and serves important economic functions. It acts as a medium of exchange, store of value, and unit of account. Money is characterized by acceptability, durability, divisibility, portability, uniformity, and stability of value. Forms of money include commodity money and fiat money. The money supply is commonly defined as M1, M2, and M3, which include various components like currency, checking deposits, savings deposits, and time deposits. Monetary policy involves the central bank setting the money supply to influence economic conditions.
Money takes various forms and serves important economic functions. It acts as a medium of exchange, store of value, and unit of account. Money is characterized by acceptability, durability, divisibility, portability, uniformity, and stability of value. Forms of money include commodity money and fiat money. The money supply is commonly defined as M1, M2, and M3, which include various components like currency, checking deposits, savings deposits, and time deposits. Monetary policy involves the central bank setting the money supply to influence economic conditions.
Money takes various forms and serves important economic functions. It acts as a medium of exchange, store of value, and unit of account. Money is characterized by acceptability, durability, divisibility, portability, uniformity, and stability of value. Forms of money include commodity money and fiat money. The money supply is commonly defined as M1, M2, and M3, which include various components like currency, checking deposits, savings deposits, and time deposits. Monetary policy involves the central bank setting the money supply to influence economic conditions.
Money takes various forms and serves important economic functions. It acts as a medium of exchange, store of value, and unit of account. Money is characterized by acceptability, durability, divisibility, portability, uniformity, and stability of value. Forms of money include commodity money and fiat money. The money supply is commonly defined as M1, M2, and M3, which include various components like currency, checking deposits, savings deposits, and time deposits. Monetary policy involves the central bank setting the money supply to influence economic conditions.
Ekonomi Moneter www.debrina.lecture.ub.ac.id By : Debrina Puspita Andriani, ST., M.Eng 15 Teknik Industri, Universitas Brawijaya e-mail : [email protected] An Overview of Money • Money Any asset that is widely accepted for purpuses of exchange, i.e. as payment for goods and services
– Money is not income, and money is not wealth
– Money is: • A Means of Payment, or Medium of Exchange • A Store of Value • A Unit of Account What is Money? • Barter is the direct exchange of goods and services for other goods and services. • A barter system requires a double coincidence of wants for trade to take place. Money eliminates this problem.
As a medium of exchange, or means of
payment, money is generally accepted by buyers and sellers as payment for goods and services. What is Money?
As a store of value, money serves as an asset that can be used to transport purchasing power from one time period to another. What is Money?
As a unit of account, money is a
standard that provides a consistent way of quoting prices. What is Money? • Money is easily portable, and easily exchanged for goods at all times. • The liquidity property of money makes money a good medium of exchange as well as a store of value. Characteristics of MONEY Acceptability -- people must be willing to accept it as a means of payment and in settlement of a debt Durability -- must last a reasonable length of time before deteriorating Divisibility -- to function as money an asset must be capable of division into smaller units to accommodate transactions of differing value Characteristics of MONEY • Portability / Convenience -- to function as money an asset must be portable and easy to use, it must be light, small to carry around and easy to transfer ownership • Uniformity -- money of the same value must be of uniform quality • Stability of Value -- in order to fulfil its various functions (especially as a store of wealth and as a means of evaluating future payment), it must retain its value • Hard for Individuals to Produce Themselves -- it must be hard to forge Categories of Money • Kartal – Materials: • Logam • Kertas – Issued by: • Negara • Bank Sentral • Giral – Primary deposit – Derivative deposit – Loan deposit FORMS of MONEY • Commodity Money – money that takes the form of a commodity with intrinsic value. Something that performs the function of money and also has alternative, non-monetary uses, e.g., gold, silver, cigarettes. For hundreds of years gold could be used directly to buy things, but it also had other uses ranging from jewelry to dental fillings. • Fiat Money/token money -- money without intrinsic value that is used as money because of government decree. Something that serves as money but has no other important uses, e.g., Coins, currency and checkable deposits (current account) Definition of Money Supply (M1, M2 and M3) · Definition of Money Supply: the quantity of money available in the economy
Definition of Monetary Policy:
the setting of the money supply by policymakers in the central bank Definition of Money Supply (M1, M2 and M3) M1 – the narrowest definition of money supply, consists of currency outside banks plus checking accounts plus traveler’s checks • Currency held outside banks – includes coins and paper money in the hands of public • Checking accounts – balances can be withdrawn by using check • Traveler’s check – issued in specific denominations, these are treated as cash • M1 = currency held outside banks + checking accounts + traveler’s check Definition of Money Supply (M1, M2 and M3) M2 – A broader definition of money supply, it includes all of the components of M1 plus time deposits and savings deposits Time deposits (fixed deposits) – interest- earning deposits with a specified maturity, which are subject to penalty for early withdrawal * Savings deposits – interest-earning deposits with no specific maturity * M2 = M1 + time deposits + saving deposits Definition of Money Supply (M1, M2 and M3) M3 = M2 + deposits with non-bank financial institution (e.g., deposits of finance companies and post office saving) CREDIT CARD ??? • is not a form of money; when a person uses a credit card, he or she is simply deferring payment for the item • serves as a temporary medium of exchange but not a store of value How about
A Man Possesses A Promissory Note, Due 5 Years From Now. by Then, Its Value Is 124,730. If The Rate of Interest Is 29 Cpd. Semi-Annually, What Is The Value of This Note Now?
A Man Possesses A Promissory Note, Due 5 Years From Now. by Then, Its Value Is 124,730. If The Rate of Interest Is 29 Cpd. Semi-Annually, What Is The Value of This Note Now?
