What is money and explain all the nuancesThe term money has several definitions according to the environment and the purpose it is meant to save. The generally accepted definition of money is: an item that is generally accepted and used as means of payments for services and goods as well as for repayment of debts within a given country (Heilbroner, 1998). Economists define money as a good that is used as a medium of exchange in a transaction. To them money is defined in reference to its functions such as: A medium of exchange, a store of value and a unit of accounting. As a medium of exchange, money is used in the exchange of services and goods to compare values of different objects. For example when a pizza is sold at $10 it means that the value of that pizza is equivalent to the $10.As a store of value; money can be reliably stored, saved and retrieved while its value should remain stable for a long period of time. As an accounting unit, money acts as a numerical unit used to facilitate accounting transactions and entries in the books of accounting. For example all the accounting items like stock, debtors and creditors are recorded in monetary terms (Heilbroner, 1998). Lastly, money is used as a measure of deferred payments such as debts, legal tenders, promissory notes etc (Heilbroner, 1998). For example company might owe its suppliers $200,000 for the raw material supplied. The amount to be paid at a later date hence the value of stock supplied is recorded in terms of money. Money can be represented in different forms for example historically; commodities such as gold, silver, barley, beads and conch shells were used as money. Precious stones such as silver and gold are referred to as representative money. Other forms of money that are commonly used are fiat money (legal tender, cheques, and promissory notes), currencies that include both the coins and paper notes. The latest form of money is digital or electronic money (Heilbroner, 1998).Reference Heilbroner, R. L. (1998). Economics Explained: Everything You Nto Know About How the Economy Works and Where It?s Going:hapter 10 and 11. New York: Prentice-Hall.
Use the order calculator below and get started! Contact our live support team for any assistance or inquiry.
[order_calculator]