characteristics and functions of money and types of money

functions of money

a medium of exchange

money allows for g/s to be trade w/o a need a need for a barter system

store of value

ppl can save now to fund spending at a later date -its value is still recognised

unit of account

the physical representation of money in terms of coins, notes and pence as used for goods and services

standard of deferred payment

enables businesses and individuals to make defferred payments (loans/mortgages)

Characteristics

physical durability, portable, divisible, hard to counterfeit

the money supply

is the stock of currency and liquid assets in the economy (cash and money in savings account)

narrow money

easily withdrawable money (coins, notes) easily converted into cash ST deposits

→ 3.5 % of UK payments

broad money

total money supply held by households/companies - mainly commercial banks deposits to households/businesses

→ 95% of UK payments