Monday, January 24, 2011

monetary system of economy


Barter system means exchange of goods for other goods. Monetary system means exchange of goods for money. Goods are the main component of barter system but money is the main factor of monetary system. Monetary transaction is easier than barter transaction.

“Money is that money does”
According to Robertson “anything which is widely accepted in payment for goods, or in discharge for other kind of obligations.”
We can define money as the following way:
Money is a medium of exchange.
Money cannot be consumed.
Money is the most liquid asset.
Money is the value of store
Money is what money does
Money is not a commodity for output.
Money can do everything
Money has no value of its govt.

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