Economics Notes: Money and Banking

Introductory Macroeconomics: Money and Banking

Evolution of Money

• Introduction to Money: Money serves as a medium of exchange. Initially, goods were used, followed by metals like gold and silver. Paper money was formally introduced around the 1750s and became prevalent after the 1930s.
• Reasons for Paper Money:
  • Increased transaction volumes necessitate more money.
  • Limited supply of gold and silver.
  • Inconvenience of handling large quantities of precious metals.
  • Safety concerns during transportation.
• People still value gold and silver for savings due to their durability and convertibility.

Barter Exchange

• Barter exchange involves economic transactions without money, referred to as a