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MONEY
Made by : Rishabh jain
WHAT IS MONEY
• Money is any good that is widely used and accepted in transactions involving the transfer of goods and services from one person to another.
FUNCTIONS OF MONEY
Medium of exchange : • Medium of exchange facilitates transactions. • Buyers uses it for purchases
and sellers accept it.
STORE OF VALUE :•In order to be a medium of exchange, money must hold its value over time; that is, it must be a store of value.Money may not even be the best store of value because it depreciates with inflation. However, money is more liquid than most other stores of value because as a medium of exchange, it is readily accepted everywhere.
Unit of account:
•A common unit for measuring the value of every good or service.
• Money can be used as a means to compare the values of goods and services•You can use the monetary value assigned to a specific good or service to compare it to one offered by a different provider.
STANDARD FOR DEFERRED PAYMENTS:
•An agreed unit of measure that enables people to contract for future payments and receipts.
CHARACTERISTICS OF MONEY:
Durability :Durability means that the money must be able to withstand being used repeatedly.
PORTABILITY:• Portability means that individuals are be able to carry money with them and transfer it easily to other individuals.
DIVISIBILITY:• Divisibility means that the money can easily be divided into smaller units of value.
UNIFORMITY:• Uniformity means that all version of the same denomination of currency must have the purchasing power.•As an example, a 2005 $2 bill will still buy $2 worth of goods or services today.
ACCEPTABILITY :• Acceptability means that everyone must be able to use the money for transactions.
SPECIALISATIONThe condition in which resources are primarily devoted to specific tasks.
Not only individuals specialize but also,
•Countries
•Firms
• Workers
ADVANTAGES AND DISADVANTAGES OF SPECIALISATION :
Increase in output and productivity
ADVANTAGES DISADVANTAGES
Continuity of supply
Increase in Profit and reduced costs
Increased efficiency
Increase in export revenue
Globally competitive
Fashion change
There will be loss if demand decreases
Greater cost of training workers
Technological breakdown may reduce or stop the production
Less flexible due to specializing only in specific task
The division of labor occurs where production is broken down into many separate tasks.
DIVISION OF LABOUR
PROS AND CONS OF DIVIDION OF LABOUR:
More goods and services can be produced
Full use is made of everyone’s ability
Time is saved
It allows the use of Machinery
Work becomes boring
Workers may feel alienated
Products are all the same
People become too dependent on each other
Higher productivity May lose job if product is no more demanded in market