Money

How well do you know your Money?

How well do you know your Money?

NATURE AND FUNCTIONS OF MONEY

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Nature and Functions of Money Learning Objectives: After completing the Chapter, you should be able to Explain the effects of Money on Economic life Discuss the discuss the Stages in Exchange Development Define the Meaning of Money Identifies the Characteristics of Good Money Explain the Functions of Money Understand the Origin of Evolution of Money

There is nothing about money that cannot be understood by

the person of reasonable curiosity, diligence and intelligence.

 A rose by any other name will smell as sweet

William Shakespeare

Atik
pera salapi bread Datung Kuwarta

Stages in Exchange Development

1st Stage- Direct Appropriation Stage What early mans needs was provided by its natural resources.

Stages in Exchange Development

2nd Stage- Barter/Direct Exchange Goods and services directly exchange for other goods and services Barter ended mans selfsufficiency and ushered in economic inter-dependence among men

Stages in Exchange Development

DIFFICUTIES OF BARTER:
1. 2. 3. 4. Product do not have the same value No double coincidence of wants Lack of store value It is cumbersome, inconvenient and indivisible

Stages in Exchange Development

3rd Stage- The Use of Commodity as Money Some goods because of its usefulness, beauty, scarcity and rarity commands a wide acceptance as medium of exchange. Non-Metallic (rice, corn, wheat, salt, tea, cattle) Metallic Money (gold, silver, copper. Intrinsic value or material value is equal its monetary value

Commodities Used as Money Throughout History Money that could be Eaten In Mexico and Central
America CORN was used as money, In Japan and the Phils. RICE was used

Money for buying a Wife

In South Sea Islands 10,000 coconuts were enough to buy a wife In the days of the Early Roman Empire, SALT were used as money. salarium

Salt Money

Commodities Used as Money Throughout History Living Money

In Egypt SLAVES was used as money, In England they were called payment in Kind

In China

Tea was used as Money

In Greece

Cattle was used as money

Stages in Exchange Development

4th Stage- Credit Money Money whose monetary value is more than its material or commodity value

DEFINITION OF MONEY

Money comes from the Greek Word Moneta

Anything which is used as a medium of exchange and is widely accepted for the payment of of goods and services, debts and obligations within a given territory without reference to the credit standing of the person who offers it

What makes Money Generally Accepted in Exchange or Payment of Goods or Services?

State Theory of Money

Money is what the law says it is.

Money has Purchasing Power The power to command goods and services
Money per se is not money unless use and accepted

What gives money its Purchasing Power? The Law has given money a Legal Tender Power. What is Legal Tender Power

A mandatory law that makes money accepted in payment for all kinds of services

Legal Tender Money

Legal Tender Money

any form of money which according to law is acceptable for all forms of obligations What are Considered Legal Tender Money in the Philippines? Notes and coins issued by BSP Can checks be Considered as Money?

Functions of Money

1. As a Medium of Exchange money serves as a common medium or tool of exchange.

The use of money as a medium of exchange promotes economic efficiency? How?

Functions of Money 2. As a Standard Unit of Value money serves as a measuring device in which value of goods and services can be express. Thus, in turn standardized the value of goods and services.

Functions of Money

3. As a Standard of Deferred Payment The money that we use as a medium of exchange is the same money we can use to pay for our debts and obligations

Functions of Money In what way will money loses it functions?

4. As a Store of Value money has the quality to be kept or store for future use

Characteristics of Good Money

1. General Acceptance accepted by anyone in exchange for goods and services 2. Stability value must not change every now and then and not susceptible to fluctuations, devaluation, inflation, etc.
3. Portability money is made light, to be easily carried from one place to another

Characteristics of Good Money 4. Cognizability design should not only be aesthetically beautiful but also difficult to counterfeit. 5. Durability money must withstand longer period of time against wear and tear 6. Divisibility divisible into small parts and likewise possible to recombine these small parts into bigger denominations

Characteristics of Good Money 7. Malleability money can be melted and beaten into a desired shape to conform to the specification of the government 8. Uniformity money must conform to certain standard to avoid confusion (size, shape, and color) 9. Homogeneity material used must be uniform in composition throughout

Denomination 1 cents 5 cents 10 cents

Composition
6% copper; 94% steel 6% copper; 94% steel 6% copper; 94% steel

25 cents 1 Peso 5 Peso 10 Peso

65% copper; 35% zinc 75% copper; 25% nickel 70% copper;24.5 zinc; 5.5nickel Ring: 75% copper; 25 nickel Core: 92% copper; 6% aluminum; 2% nickel

Discussion Questions:

Question Why do our govt. need to regulate the volume of money?

How does the govt. regulate the volume of Money in Circulation?

Q

 The Philippine Money

3 Important Types of Money 1. Commodity Money- money that is made up of precious metal or another valuable commodity a. Non-Metallic Money b. Metallic Money gold/silver 2. Credit Moneycredit instruments by the government backed by a promise to pay a. Government Notes b. Bank Notes

3 Important Types of Money

1. Fiat Money -refers to paper currency decreed by government as legal tender but not convertible into coins or precious metal.
-It is backed by a government promised that it is legally acceptable as a means of exchange for products -State Theory of Money (Japanese

Imperial Notes)

Currencies of the World

Name of Currency Bolivar Real Dinar Country Using
Venezuela Brazil Algeria, Jordan, Kuwait and others

Dirham Dollar Drachma Franc

Guilder

Morroco, UAE Australia, Canada, New Zealand, Singapore, U.S. and others Greece Belgium, France, Switzerland and others Netherlands & Suriname

Currencies of the World

Name of Currency Koruna Krona Country Using
Czech Republic, Slovak Rep Iceland and Sweden

Krone Lira Mark Peseta Pound

Denmark, Norway Italy, Turkey, and others Germany Spain Egypt, Great Britain, Lebanon and others

Currencies of the World

Name of Currency Rand Riyal Country Using
South Africa, Namibia Saudi Arabia, Qatar

Rupee Schilling Yen Yuan

India, Pakistan and others Austria, and others

Japan China

Research Work:

1. Where does the supply of money in a specific government comes from? How does a government control its supply of money? How does the supply of money affect the economy or economic activity of a country, provide an example
2. How do you relate this with the current financial conditions of our country?