Money Supply And Federal Reserve System (Characteristics of Money (:<3…
Money Supply And Federal Reserve System
Definition 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.
Characteristics of Money
:<3: Recognizable money must be generally acceptable where people know that is can be used as a medium of payment and can be exchanged with any goods and services.
:<3: Scarcity money must be relatively scarce
and hard for people to obtain. if it is easy to obtain money, then it will not be acceptable to be exchange with good and services
:<3: Stable in Value Money’s value must remain relatively constant over long periods of time. its volume must be easily regulated because too much supply of money will reduce its value .
:<3: Portable Money must be easy to carry. if it too heavy , like gold then it can create problems to carry it in a large amount .
Classification Of Money
:star:Commodity Money used as a payment and it have a value. for example foods, cloths
:star: Fiat Money issued by the central bank. money issued by the central bank known as Bank Negara Malaysia includes coins and paper money.
:star: Legal Tender is a paper money had approved by government to be accepted of payments. All transaction in Malaysia will be in RM.
Function Of Money
:<3: Store of Value money can be one of the financial assets because of the store for wealth and it is a way to save for future spending.
:<3: Means of Exchange can be used for buying and selling goods and services. If there were no money, goods would have to be exchanged through the process of barter
:<3: Units of Account money is the common standard for measuring relative worth of goods and service.
Types Of Money
:pencil2: coins are limited legal tender . legal tender means it is made legal by government decree , which must be accepted as a medium of exchange and settlement of debts . it is limited tender as a certain values of coins can only be used in a limited amount . a seller is no obligated to accept a payment of RM100 made with 5 cents coins, coins is also known as token money because its face value is greater that the metallic content of the coins .
:pencil2: Notes this paper money is an unlimited legal tender where it can be used without any limit. legal tender in Malaysia is Ringgit Malaysia and cent .
:pencil2: Current Deposit it is also known as demand deposit , sight deposit , bank deposit and cheque deposits. a demand deposits is money and that is transferable by way of cheque deposits
Non Bank Financial Institution
Non Bank Financial Intermediaries
Development Financial Institution
Employees Provident Fund