Lectures in Basics of Finance

Basics for money: definition and role of the money (with a brief historical overview). Explanations for the inflation phenomenon

Difficulty in defining the money

Commonly, money is a part of our wealth, that is generally acceptable in exchange for goods and services.

(Descriptive definition:) The functions of money

Roles, attributed to money in the economy: medium of exchange, unit of account, store of value, with gold: standard of value with key currencies: world money.

Brief historical overview

Different forms of money, as have been evolving through centuries: Within primitive societies: commodity money, Precious metals (gold, silver)

 Bank notes (as receipts for gold deposited with banks,

or as promises given by the state treasury)

 Money with no intrinsic value, and electronic money.

The inflation phenomenon

Inflation is the decrease of the purchasing power of our money. Explicitly, it is the periodical rate of change of the level of prices. Statistically measured by indices, like the producer price index, the consumer price index or the core inflation.

Explanations for the inflation phenomenon

The reasons behind: The excessive and long term growth of money supply, The changing pattern of demand for goods and services (such as variations in the aggregate demand, technological changes or commodity price shocks), Imported inflation.