Money

Money is any item or verifiable record that is generally accepted

as payment for goods and services and repayment of debts, such
as taxes, in a particular country or socio-economic context.[1][2][3] The main
functions of money are distinguished as: a medium of exchange, a unit
of account, a store of value and sometimes, a standard of deferred
payment.[4][5] Any item or verifiable record that fulfils these functions can
be considered as money.
Money is historically an emergent market phenomenon establishing
a commodity money, but nearly all contemporary money systems are
based on fiat money.[4] Fiat money, like any check or note of debt, is
without use value as a physical commodity. It derives its value by being
declared by a government to be legal tender; that is, it must be accepted
as a form of payment within the boundaries of the country, for "all debts,
public and private".[6] Counterfeit money can cause good money to lose
its value.
The money supply of a country consists
of currency (banknotes and coins) and, depending on the particular
definition used, one or more types of bank money (the balances held
in checking accounts, savings accounts, and other types of bank
accounts). Bank money, which consists only of records (mostly
computerized in modern banking), forms by far the largest part of broad
money in developed countries.[7][8][9]

Aims and objectives of money in economics

Aims is to achieve price stability, a viable balance of payments and economic
growth. The main twin objectives of monetary policy are; a) low and stable
inflation rate and b) maintaining a sufficient level of official foreign exchange
reserves. Money is the most important component in field of economics.

Aims and objectives of the money are:

1) To simplify the exchanging method for purchasing goods or services ,in a

national or international market.

2) To evaluate the currency exchange values of different international trading

systems.

3) To easily transfer the economic value from one place to another .

Importance of Money
Money is an essential and basic necessity in a modern economy. In the beginning of human
existence, human needs were so simple that they could be satisfied by barter system , i.e.,
exchange of goods for goods. In baster system, an individual produces some goods in greater
quantity than what he could consume and then exchanges the extra units with another
individual for something he needed in return. Barter system suffered from lack of double
coincidence of wants, lack of common measure of value, difficulty in stored of extra goods
and indivisibility of goods. The main advantage of using money is that it decomposes a single
barter transaction into two separate transaction of Sale and Purchase. People can hold their
wealth in the form of money as a generalised purchasing power which can be utilised to buy
goods and services as and when they desire. Money s a pivot around which the whole
economy revolves. It alone has the power to buy things directly in the market. It does not
require to be spent. All economic system-Capitalist, Socialist and Maixed-need money.
1. Money may not produce anything, but without it, nothing can be produced.
2. With the help of money, consumers make payment for goods and services.
3. With the help of money, producers can but raw material, plant and machinery. They can settle
their debts and pay corporate taxes.
4. Money has contributed to economic growth all over the world because it has removed trade
barriers.
5. With the help of money, government realises all taxes, fees, fines, penalties and other sources
of public revenue.
Thus, money can serve mankind if it is controlled and regulated. But if it goes out of control,
it can lead to disastrous consequences. It is rightly said that "money is a good servant and a
bad master".