Definition of money, its function and history. What do you do, or what do you do?

What do you do, or what do you do Capital? Currently, it is a contractual payment method, and it is also a commodity. Subject to exchange for other goods. Nowadays, it can be physical (such as metal, metal, and paper money), immaterial (such as electronic) or non-cash (such as checks, bills of exchange, and bonds). Thanks to it, it is possible to easily determine the value of products or services, exchange goods, pay or store savings for future use. Money separates the transfer of goods and payment for them.

Before money was created, people traded in barter among themselves i.e. product for product. Typically, manufacturers used barter trade, such as grain for pigs and salt for leather. However, it presented many difficulties. Sometimes it was not easy to determine the value of a particular commodity. If someone eats salt and the other wants to replace it with meat instead of skins, it is not replaced. So the need arose for neutral payment methodsthat each party to the transaction will accept. In other words, an intermediate link was necessary – at first they were made of money (such as shells, amber or linen). Then there were non-standard pieces of ore (including gold and silver), then bars, and finally Capital in the form of coins.

See also: Economics – the study of the laws that govern production

Where does the money come from? What is paper money?

central bank It is a government institution to issue CapitalBut also conduct monetary policy. It tries to ensure that the value of this means of payment does not fall excessively and that prices remain stable. In Poland, the National Bank of Poland performs this function. Enter the circulating currency (physical medium, such as bank notes or coins) that is legal tender.

There is a concept related to the issue of money Capital Asset Allocation Consultant. Previously, units of thrust had an analogue in the weight of the metal, such as gold. In this system, the source of cash provided a guarantee. He said he would exchange it for gold of the same weight. Capital Fiats (like the Polish zloty), which citizens currently deal with, are based not on material goods, but on trust in the issuer.

Money – its improvement and its functions

Cash as a contractual payment has many functions, and therefore it has been improved over the years. It is important that it is small, suitable for long storage, durable and resistant to various conditions. These requirements were met, for example, by gold. However, its divisibility and lightness were also important. Over the years, it has also become easier and easier to produce – which is why banknotes and coins exist nowadays.

Capital He performed and continues to perform many important functions. considered to be:

  • exchange average,
  • A financial instrument for transferring payments,
  • a measure of the value of goods,
  • deferred payment arrangement,
  • method of collecting savings (hoarding),
  • A tool for exchange between countries.

The functions of money – the medium of exchange and the financial instrument

Capital As average exchange. It is the oldest and simplest application of it – it mediates money-for-goods transactions. One side donates the product and Capital change owner. For the money received, you can exchange for other goods. It is similar to work – the employer, in exchange, gives the employee a contractual means of payment, and buys, for example, food.

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