MONEY FOR VALUATION!!!

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MONEY FOR VALUATION!!!

• The unit for measuring love is Goat Commodity
  Money????
• Goat is an animal of the sheep family
• Spouse is your Husband or Wife

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EVOLUTION OF MONEY

• Money was developed according to needs
  Requirements.
• Main aim was to remove the shortcomings of the
  Barter System.

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DIFFERENT STAGES OF EVOLUTION OF MONEY

1. COMMODITY MONEY
2. METALIC MONEY
3. PAPER MONEY
4. CREDIT MONEY
5. ELECTRONIC MONEY

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1. COMMODITY MONEY

• When different commodities were used as a medium
  of exchange (BARTER SYSTEM)
• Cow Heads, Goats, Axes, Dried Fishes etc were
  used as medium of exchange.

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1. COMMODITY MONEY

• Barter System had different problem like
• Storing Problem
• Durability problem
• Transportation problem
• Divisibility problem

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2. METALLIC MONEY

• The next step in the evolution was the discovery
  of precious metals like Gold, Silver, Copper.
• Metallic Money consist of coins made of Gold,
  Silver, Copper or nickel as a mode of payment.

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2. METALLIC MONEY

• UnCoined Metals
• Metals were not used as a coin but as a Bullion.
• This created the problem of measuring the weight
  Value.
• Supply of money also became problem when the
  mines were fully used up or new mines were
  discovered.
• Transportation Storage problem were also there.

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2. METALLIC MONEY

• Coined Metals.
• As a next step, standard coins were created.
• They had a standard weight value.
• Problem of un coined metals started here as well.

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2. METALLIC MONEY

• Metallic money can be
• FULLY BODIED
• Whose Face Value is equal to the value of metal
  contained in it.
• TOKEN MONEY
• Its Face Value is Higher than Intrinsic Value
  (Value of Metal)

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3. PAPER MONEY
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3. PAPER MONEY

• When paper currency was introduced as a mode of
  payment.
• Originated as a receipt issued by Goldsmiths.
• These receipts were then later on used for
  payments.
• Difference in the value of receipts was becoming
  a problem then.

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3. PAPER MONEY

• PAPER MONEY
• Refers to the Notes issued by the State or by the
  Bank, usually the Central bank.
• Paper Money can be
• Representative Paper Money.
• Convertible Paper Money.
• Fait Paper Money.

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3. PAPER MONEY

• Representative Paper Money.
• It is that money which is fully backed by
  equivalent metallic reserves.
• Convertible Paper Money
• Which is convertible into coins on demand.
• Fait Paper Money
• Which is not redeemable or convertible into Gold
  or Silver on demand. It is accepted because it is
  declared legal tender by the issuing authority
  and has general acceptance as a medium of
  exchange. The intrinsic value of Fait money is
  Nil.

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4. CREDIT MONEY

• Includes Bank money (different instruments
  offered by the Banks.)
• Cheques, Drafts, P.O, T.C are examples.
• Convenient, Safe and easily convertible into
  cash.
• Its like Near Money.

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5. ELECTRONIC MONEY
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5. ELECTRONIC MONEY

• Electronic money (also known as e-money,
  electronic cash, electronic currency, digital
  money, digital cash or digital currency) refers
  to money or scrip which is exchanged only
  electronically. Typically, this involves use of
  computer networks, the internet and digital
  stored value systems.

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CHARACTERISTICS OF MONEY
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CHARACTERISTICS OF MONEY

• General Acceptability.
• Stability of Value.
• Transportability.
• Storeability.
• Divisibility.
• Homogeneity.
• Cognizability.
• Malleability.

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LEGAL TENDER.

• Means of payment, which has states sanction
  behind it and can be used to settlement of Debt
  obligations
• Debtor can compel creditor to accept it.
• Unlimited Legal Tender.
• Limited Legal Tender.

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LEGAL TENDER.

• Unlimited Legal Tender.
• Money in terms of which debt can be legally paid
  up to any amount.
• All type of Currency Notes.
• Limited legal tender.
• Money in which debt can be paid to a certain
  limit.
• 50 Paisa Coins.

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MEASURING MONEY

• Changes in the amount of money in the economy are
  related to changes in Interest rates, Economic
  Development Inflation.
• Inflation rise in price level makes the value
  of the money less.
• Measured by Money Aggregates M1, M2, M3.

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MEASURING MONEY

• M1
• Currency and checkable Deposit Accounts and other
  bank money instruments.
• Most Liquid assets of a Financial System.
• M2
• M1 Those assets which cant be used directly as
  a mode of payment and converted into currency.
• Small denomination Time deposit etc.
• M3
• M2 Long term investments.
• Assets which are important to large institution
  and not to individuals.

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MEASURING MONEY
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