What is the difference between fiat money and commodity money?
Commodity money: Money that derives its value from the substance or the potential use of the money itself. Commodity money is said to have “intrinsic value” Fiat money: Money that has its value due to decree and legislation by the government. Fiat money is said to have no “intrinsic value”
What is the difference between commodity money and fiat money why do people accept fiat money in trade for goods and services?
What is the difference between commodity money and fiat money? Commodity money involves the use of an actual good in place of money (gold coin, tobacco). Fiat money has no other value than as a medium for exchange; value comes from government (paper money).
What are the qualities of good money?
The qualities of good money are:
- General acceptability.
- Portability.
- Durability.
- Divisibility.
- Homogeneity.
- Cognizability.
- Stability.
What are the defects of money?
The economic defects are as under:
- (1) Instability in the Value of Money:
- (2) Unequal Distribution of Wealth and Income:
- (3) Growth of Monopolies:
- (4) Wastage of Resources:
- (5) Black Money:
- (6) Cyclical Fluctuations:
- (2) Political Instability:
- (3) Tendency to Exploit:
What are the 4 main functions of money?
whatever serves society in four functions: as a medium of exchange, a store of value, a unit of account, and a standard of deferred payment.
What is the real purpose of money?
Money is a generally accepted, recognized, and centralized medium of exchange in an economy that is used to facilitate transactional trade for goods and services. The use of money eliminates issues from the double coincidence of wants that can occur in bartering.
Which is the most important function of money?
Money serves as a medium of exchange, as a store of value, and as a unit of account. Medium of exchange. Money’s most important function is as a medium of exchange to facilitate transactions.
What are the roles of money?
Functions of Money Money has three primary functions. It is a medium of exchange, a unit of account, and a store of value: 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.
What are the two primary or basic functions of money?
Medium of exchange and measure of value are the two primary functions of money.
What are the primary and secondary functions of money?
- Primary function: The primary function of money includes money as a medium of exchange and money as a measure of value.
- Secondary function: The secondary function of money includes money as a store of value and money as a standard of deferred payment.
- Contingent function:
What are the primary and secondary functions of bank?
Functions of Commercial Banks: – Primary functions include accepting deposits, granting loans, advances, cash, credit, overdraft and discounting of bills. – Secondary functions include issuing letter of credit, undertaking safe custody of valuables, providing consumer finance, educational loans, etc.
Which of the following is a secondary function of money?
Money facilitates lending and borrowings, because the borrowings are in the form of money and the repayment are also in the form of money. Due to general acceptability, stability of value compared to other goods, durability etc., money acts as a standard of deferred payments.
Which is not the primary function of money?
Therefore, power indicator is not a function of money.