What are the 4 types of money?
The 4 different types of money as classified by the economists are commercial money, fiduciary money, fiat money, commodity money.
There are 5 different types of money in the world: Fiat, commodity, representative, fiduciary, and commercial bank money. They also all have three functions in common; they serve as a medium of exchange, as a store of value, and as a unit of account.
Economists differentiate among three different types of money: commodity money, fiat money, and bank money.
- Currency: The currency is a country's unit of exchange issued by their government or central bank whose value is the basis for trade. ...
- Deposit Money or Bank Money: ...
- Legal Tender Money (Force Tender): ...
- Near Money: ...
- Electronic Money: ...
- Fiat Money:
Money serves four basic functions: it is a unit of account, it's a store of value, it is a medium of exchange and finally, it is a standard of deferred payment.
- Function # 1. A Medium of Exchange: ...
- Function # 2. A Measure of Value: ...
- Function # 3. A Store of Value (Purchasing Power): ...
- Function # 4. The Basis of Credit: ...
- Function # 5. A Unit of Account: ...
- Function # 6. A Standard of Postponed Payment:
To summarize, money has taken many forms through the ages, but money consistently has three functions: store of value, unit of account, and medium of exchange.
A fiat money is a type of currency that is declared legal tender by a government but has no intrinsic or fixed value and is not backed by any tangible asset, such as gold or silver.
M1 and M2 are known as narrow money. M3 and M4 are known as broad money. These gradations are in decreasing order of liquidity. M1 is most liquid and easiest for transactions whereas M4 is least liquid of all. M3 is the most commonly used measure of money supply.
What is money? Money is a commodity accepted by general consent as a medium of economic exchange. It is the medium in which prices and values are expressed. It circulates from person to person and country to country, facilitating trade, and it is the principal measure of wealth.
What is the best example of money?
The best example of money that illustrates its properties is gold. Gold is universally accepted by most cultures as a means of payment because it is relatively scarce, and new supplies are difficult to find and mine.
The first metal money dates back to 1000 B.C. China. These coins were made from stamped pieces of valuable metal, such as bronze and copper. Early iterations of coins were also used by ancient Greeks, starting around 650 B.C.
- Function # 1. A Medium of Exchange: ...
- Function # 2. A Measure of Value: ...
- Function # 3. A Store of Value (Purchasing Power): ...
- Function # 4. The Basis of Credit: ...
- Function # 5. A Unit of Account: ...
- Function # 6. A Standard of Postponed Payment:
M1 and M2 are known as narrow money. M3 and M4 are known as broad money. These gradations are in decreasing order of liquidity. M1 is most liquid and easiest for transactions whereas M4 is least liquid of all. M3 is the most commonly used measure of money supply.
The characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability.