2Content $ 10 $ 10 $ 10 $ 10 10 $ 10 1.Barter System 2. Functions of Money$ 10103. Properties of Money$ 104. Types of Money
3Content 1.Barter System 2. Functions of Money 3. Properties of Money 4. Types of Money
4Barter SystemIn ancient times before money was invented, people exchanged goods directly for other goods. This way of carrying out exchange is called barter.
5Inconveniences of Barter Difficulty in meeting double coincidence of wants
6Inconveniences of Barter Higher cost of agreeing on an exchange ratio.
7Inconveniences of Barter Lack of common measure of valueInconvenience of storing wealth
8When Money Is Used...A person can sell his goods for money and then keep the money for future use.The act of selling is separated from the act of buying
9Content 1.Barter System 2. Functions of Money 3. Properties of Money $$$2. Functions of Money3. Properties of Money4. Types of Money
10Functions of Money As a generally acceptable medium of exchange As a store of valueAs a standard of deferred paymentAs a unit of account
11So, what is MONEY ?MONEYMoney can be any asset that is generally acceptable as a medium of exchange for settling payments or debts.
12Content 1.Barter System 2. Functions of Money 3. Properties of Money 4. Types of Money
13Properties of Money Generally acceptable Limited in supply Durable PortableDivisibleHomogeneous
14Content 1.Barter System 2. Functions of Money 3. Properties of Money $ 54. Types of Money
15Types of Money C C Commodity money has intrinsic value e.g. cattle,silk, gold and silverConvertible paper moneye.g. gold and silver certificates
16Types of Money Inconvertible paper money also called ‘Fiat Money’ simply declared by the government as moneylegal tendere.g. notes and coins
17Types of Money Deposit money Demand deposit current account banks do not give any interestnot legal tendere.g. cheque
18Types of Money Saving deposit interest is paid hold passbook to withdraw fundsnot allow to withdraw more than balance in one’s accounte.g. EPS
19Types of Money Time (or fixed) deposits place one’s money with the bank for a period of time Maturity periodinterest rates are higher than those on savings depositsNegotiable Certificates of Deposits (NCDs)floating interest ratestransferable
20Types of Money Electronic money card storing some amount of cash deducted when buy goods and services