Dollar bills are an example of fiat money because their value as slips of printed paper is less than their value as money. These financial instruments together are collectively referred to as the money supply of an economy. Standard Money: Standard Money is that form of money in terms of which all other forms of money in the country are measured. Money is primarily a medium of exchange or means of exchange. When we report the value of a good or service in units of money, we are reporting what another person is … Most authors find that the first two are nonessential properties that follow from the third. Standard Money: Standard Money is that form of money in terms of which all other forms of money in the country are measured. We use money in this fashion because it is also a medium of exchange. Money is whatever can be used in order to settle payments. Nowadays, the most common kind of money are current accounts in the banks. In economics, money is any financial instrument that can fulfill the functions of money (detailed above). ADVERTISEMENTS: We give below different kinds of money: 1. Gold coins are an example of commodity money. It is a way for a person to trade what he has for what he wants. Money serves as a unit of account, which is a consistent means of measuring the value of things. Role of Money in Economic Development of Developing Countries! Bartering was one way that people exchanged goods for other goods before money was created. Money is a medium of exchange; it allows people to obtain what they need to live. Dictionary Term of the Day Articles Subjects BusinessDictionary Business Dictionary Dictionary Toggle navigation. Before the peak of the Mayan civilization, cacao seeds were used as money in order to do business with the neighboring Aztec civilization, who also viewed cacao seeds as desirable currency for exchange. Within few days is spent, for example in a shop, and the shopkeeper brings urgently cash back to a … The circulating money involves the currency, printed notes, money in the deposit accounts and in the form of other liquid assets. Money is a good that acts as a medium of exchange in transactions. View the latest business news about the world’s top companies, and explore articles on global markets, finance, tech, and the innovations driving us forward. According to the Bank of England, in a modern economy, money is a type of IOU, but one that is special because everyone in the economy trusts that it will be accepted by other people in … Definition: The total stock of money circulating in an economy is the money supply. In this lesson, you'll learn what money is and its four basic functions. Money effectively eliminates the double coincidence of wants problem by serving as a medium of exchange that is accepted in all transactions, by all parties, regardless of whether they desire each others' goods and services. Learn Economics of Money and Banking from Columbia University. It is unlimited legal tender and is subject to free coinage, i.e., anybody can bring his metal and get coins made of it. Over time, the characteristics of money as a medium of exchange made it a more practical way to conduct business. Fiat money is a good, the value of which is less than the value it represents as money. It is unlimited legal tender and is subject to free coinage, i.e., anybody can bring his metal and get coins made of it.