what is meant by money explain the types of money
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Answer:
Money is any good that is widely used and accepted in transactions involving the transfer of goods and services from one person to another. Economists differentiate among three different types of money: commodity money, fiat money, and bank money. Commodity money is a good whose value serves as the value of money
Explanation:
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Answer:
Anything which can be used as the medium of exchange is called money.
Money can be broadly classified into two types-
(i) Money of account: The abstract idea which gives us the concept of money is known as money of account. Money of account changes its form from time to time.
(ii) Money proper : Money in circulation which keeps on changing from time to time is known as money proper.
But there are more classifications of money such as:
(a) Commodity money : In the barter system, various commodities were used as medium of exchange which was known as commodity money.
(b) Animal money : When animals were used as the medium of exchange, it was known as animal money.
(c) Metallic money : The valuable metals like gold or silver were used as the medium of exchange were known as metallic money.
(d) Paper money : Money issued on paper with specific signs and symbols which is issued by the central bank of a country is known as paper money.
(e) Legal tender money : When the general acceptability of money as a medium of exchange is supported by the law is known as legal tender money . It is of two different types-
(i) Limited legal tender money
(ii) Non - limited legal tender money
(f) Non- legal tender money : When the general acceptability of money is as the medium of exchange does not have legal value, it is known as Non- legal tender money.
(g) Fiat money : Money supported by the authority or the power of a state is known as Fiat money. Here, the word " Fiat" means the authority or the power of a state.
(h) Token money : When the face value of money is higher than its metallic value, it is called token money.
(i) Cheque money : The type of Non- legal tender money which has been increasingly used to settle transactions but which is not generally acceptable is known as cheque money.
(j) Standard money : The unit of money by which the value of all other units of money is related is called standard money. E.g: the standard money of India is rupee.
(k) Hot money : The type of money that goes out of a country due to socio- economic disorder, it is known as hot money.
(l) Dear money : When the central bank increases the rate of interest against loans, the banks and individuals get less amount of money with them. As a result, money becomes dearer and hence it is known as dear money.
(m) Easy/Cheap money : When the central bank reduces the rate of interest against loans, it becomes easier for banks and individuals to get money. Thus, money becomes cheaper and it is known as easy/ cheap money.
(n) Black money : The unaccounted money for which tax is not paid to the government is known as black money.
(o) High- power money : That particular part of total money supply in a country which is under the direct control of the central bank of a country is known as High- power money.