Advantages And Disadvantages Of Money

Money:

• Anything that is generally accepted in payment for goods and services or in the repayment of debts.

• A rather broad definition: Checks are also accepted as payment for purchases.

Money is different from:

1. Wealth: The total collection of pieces of property that serve to store value.

2. Income: Income is the flow of earnings in per unit of time.

History of Money:

The history of money concerns the development of means of carrying out transactions involving a medium of exchange. Money is a very well-known object which is generally accepted as payment for goods and services, and repayment of debts within a financial market of any country. In markets many things have been used as medium of exchange including commodities, precious metal

Paper Money

4. Credit Money

5. Plastic Money

1. Commodity Money:

Money is a common thing used in exchange for purchasing goods and services. In older times, almost in all parts of world barter system was used as a medium of exchange. This system create money problem for the people because it were only done, when the people has need for something that another have in return to offer the thing which is needed by those person. But commodity money solves these problems and allows the people to buy the thing that is needed by them without considering the need of seller. In this regard, things like shells, salt and pebbles came into existence.

Disadvantage: The problem with a payments system based exclusively on precious metals is that such a form of money is very hard and is hard to transport from one place to another.

For example: Person A can sell his wheat to C person in return of shells as a form of money and then buy rice from person B by presenting the money to him.

2. Metallic

The economic experiment known as monetarism a limiting the supply of money in order to control inflation was impulsive giving a clear view of impossibility to define a precise definition of money supply. Some modern central banks introduced the idea of negative interest rates which puzzles the people who thinks that savers should be rewarded for thrift. The money has evolved over the ages to match the economy and society needs. Sometimes the change in money occurs due to inflexibility of previous form. Metal coins were expanded by bills of exchange making long-term trade easier. Credit and debit cards have replaced the complicated process of clearing checks. The cash will and should shrinked away. The future of money does not belong to plastic cards but to mobile phones. Furthermore, in future you may hire can Uber care and no cash transaction will be involved with the driver. The app contains the detail of your credit card, so when you leave the car. You receive an e-mail with the details of the bill. The money has to perform both a means of exchange and store of value. The fascination of some communities to keep issuing money would certainly be great. In that case, these electronic currencies may suffer fast depreciation. There might be a gap between the prices of goods at which people buy and sell. The future may be mobile but it will not be as