Definition of Money

• Money


  Economists define money as generally accepted in payment for goods or services or in the repayment of debts
• When most people talk about money, they are talking about currency
• If someone comes up to you and shouts loudly, "your money or your life," you should quickly handover all your currency rather than risk your life
• Money


  Any good that is widely used and accepted in transactions involving the transfer of goods and services from one person to another
• Money


  A commodity accepted by general consent as a medium of economic exchange
• Money


  • It serves as the medium for expressing prices and values
  • As currency, it circulates anonymously from person to person and country to country, facilitating trade
  • It is the primary measure of wealth
• Money


  • It is immediately exchangeable for all kinds of marketable assets, such as goods and services, real estate, or whatever
  • Each person accepts money as a means of payment because he/she is confident that others will accept it as payment for him/her
  • The social convention could either be established through legal or other means
• Criteria for a commodity to be accepted as money

  • Standardization: it must be easily standardized, making it simple to ascertain its value
  • Acceptability: It must be widely accepted as a medium of exchange
  • Divisibility: It must be divisible so that it is easy to make a change
  • Portability: it must be easy to carry
  • Durability – it should not degrade quickly
• Money


  A commodity chosen by common consent as a medium or instrument of exchange
• All other commodities are thus expressed and valued in terms of that commodity regarded as money
• Such a commodity should be recognizable and acceptable to all who use it as a medium of exchange
• Money originates in the form of a commodity, having a physical property that can be adopted by market participants as a medium of exchange