EVOLUTION AND FUNCTIONS

OF MONEY
DR. SHIVANI MOHAN
ASSISTANT PROFESSOR OF ECONOMICS
C.N.L.U., PATNA
EVOLUTION AND INVENTION OF MONEY

• Early evidence of spears, skins, stones, axes, tea, tobacco and precious
stones and cattle used as money.
• Metals were used to replace cattle.
• Metallic money resulted in coinage
• Later written documents like travellers cheque substituted metalic
money
• Paper currency came into existence
BENEFITS OF PAPER MONEY

• Direct exchange giving way to indirect exchange

• Avoidance of double exchange
• Rational and easier calculations
• Common measure
• Value of exchange and store
DEFINITION OF MONEY

• “ Money is what money does, that which does the money work is the money thing”
-Walker
“We understand, therefore, by the term ‘money’ the complex of those objects which in
a given economic area and in a given economic system have as their normal purpose
the facilitation of economic intercourse between economic individuals”
-Karl Helfferich
 CONTD.

• On the basis of different definitions of money and its

characteristics, it is defined as any commodity can be money if it
has
1. General acceptability
2. Acceptance without any fear
3. Acceptable present as well as for deferred payments
CLASSIFICATION OF MONEY
• Money of account and Actual Money

• Legal Tender Money and Optional money

• Metallic Money

I. Standard money
II. Token money
• Paper Money

1) Representative money
2) Convertible Paper money
3) Inconvertible Paper money
4) Fiat Money

• Credit Money
• Near Money
FUNCTIONS OF MONEY

1. Primary Functions
a) Medium of Exchange
b) Measure of Value

2. Subsidiary Functions
a) Standard of deferred payments
b) Store of Purchasing Power
c) Transfer of purchasing power
• Contingent Function
• Other Functions
Thank You!