Money originated from the difficulties of bartering and was developed to serve as a medium of exchange. It has key characteristics like being generally acceptable, divisible, recognizable, and having a stated value. Early forms of money included commodity money like precious metals. Modern forms include coins, paper money, and negotiable instruments. Money supply is measured by M1, M2, and M3, which include various types of currency, checking and savings deposits, money market funds, and time deposits.

1. Money

2. GC UNIVERSITY
FAISALABAD
BS COMMERCE

3. What is money???
• Something which can
be used as a medium of
exchange and generally
acceptable in every
transaction.
• The material thing
which circulate in hand
by hand and discharged
by debt.

4. Characteristics of good money
1. Generally acceptable and circulate hand by
hand.
2. Divisible and recognizable for
transactions.
3. Storeable for long time and not perishable.
Shoud be elastic and economical.
4. Must have stated value

5. Origen of money
• The difficulties of barter system compelled
people to originate money. the word money
came from Latin word Moneta which
means goodness

6. Kinds of Money
• Commodity money
• basic item used by
most people
• intrinsic value –
value even if not
used as money

7. Kinds of Money
Good exchange for
goods
Precious metals
Gold
Coins
Finally paper money
Negotiable instruments

8. Measuring Money Supply
•
M1
– money serving as medium of exchange
– coin, currency, checking deposits, travelers checks, NOW
accounts, etc.
•
M2
– money serving as store of value
– M1, plus
– savings deposits, small time deposits (CDs <$100K), money market
funds, overnight Eurodollar deposits
•
M3
– money serving as measure of value
– M2, plus
– large time deposits, Eurodollar time deposits, less liquid assets