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Lecture 04 - Functions and Economic Role of Money - 2020
Lecture 04 - Functions and Economic Role of Money - 2020
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MONETARY THEORIES
§ STATE THEORY OF MONEY
ü This theory of money states that “the purchasing power
of money over goods and services stems from its legal
tender power granted to it by the laws of the State.
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VALUATION CONCEPTS OF MONEY
§ VELOCITY OF MONEY
ü The velocity of money refers to the number of times
that the average peso or any other monetary unit is
spent in a given period of time
§ LEGAL TENDER
ü Legal tender means money that may be legally offered
in payment of an obligation and that a creditor must
accept
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VALUATION CONCEPTS OF MONEY
§ FACE VALUE
ü This is the value that appears on the “face” of a bank
note or a coin and dictates the exchange value of the
money or the value of goods and services that it can
purchase
§ DOMESTIC VALUE
ü This is the value of money within its country of origin
and is measured by its purchasing power for goods and
services during different periods of time
§ INTERNATIONAL VALUE
ü This value is measured by the exchange rate of the
local monetary unit with respect to other freely
convertible monetary units of foreign countries
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VALUATION CONCEPTS OF MONEY
§ PURCHASING POWER
§ DEVALUATION OR DEMONETIZATION
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ORDER vs. BEARER
ORDER INSTRUMENT
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ORDER vs. BEARER
BEARER INSTRUMENT
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DIFFERENT KINDS OF CHECKS
Crossed Check
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DIFFERENT KINDS OF CHECKS
Certified Check
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DIFFERENT KINDS OF CHECKS
Post-dated Check
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DIFFERENT KINDS OF CHECKS
Bouncing Checks
§ these are checks whose accounts from which
payment is to be drawn are insufficient to cover
the amount for payment indicated on the check
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NEW CHEQUE CLEARING POLICY
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NEW CHEQUE CLEARING POLICY
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NEW CHEQUE CLEARING POLICY
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NEW CHEQUE CLEARING POLICY
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NEW CHEQUE CLEARING POLICY
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CHECKS vs. CURRENCY
ADVANTAGES OF CHECKS VERSUS CURRENCY
Although checks are not legal tender, their use has been
widespread in business transactions because of the following
advantages:
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PRECAUTIONS WHEN WRITING CHECKS
For his own personal protection, as well as in accordance
with the interest of the bank, it becomes incumbent
upon the holder of a checking account to observe some
precautions in writing checks which include the
following:
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PRECAUTIONS WHEN WRITING CHECKS
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PRECAUTIONS WHEN WRITING CHECKS
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