Money

Question 1

What is money

Answer 1

Anything accepted widely as a payment for goods received and services provided and performed or repayment of past debt.

Question 2

Functions of money

Answer 2

• Medium of exchange
• Measure of value
• Store of value
• Standard for defered payment

Question 3

Forms of money and their description.

Answer 3

1. Cash (Notes & Coins):
   - Issued by government.
   - Must be accepted by law.
   - During inflation may have disadvantages.
2. Money in current accounts:
   - Can be withdrawn on demand Ceash)
   - Little to no interest is paid
   - Loses value overtime during inflation.
   - Cheques & debit cond are used in purchase of goods and services.

3.Near money:
- Are assets that fulfill some but not all the
functions of money.
- It is convertible into a medium of exchange quickly
and at a little cost.
Example: Time deposits with saving banks
-They act as a good measurement of value and state
of value but as a medium of exchange as you can’t make immediate transactions.

4. Non- money financial assets:
   - Can be converted into money
   - Most assets can be longer waiting times and withdrawal their can be big loss of money.
   Example: shares easy to sell
   -No store of value
5. Money substitutes:
   - Credit cards arent money but is money substitute.
   - Represents an ability to borrow money instantly