Date

Page--

oney Meaning funcdtions

Meaning anddejinition df money-

(1The uwond morey iS desiwd trDm He
ain Od moneta Lhich ulas the
suname df Roman aoddess A Jin
mon uas colned in thee lemple a t
ome
22 Money_is definc iany-Ling hat is
laccep-lable as a means_cf_exchang
Haat at the same Hne aitak a
( Zhaee Lmpetant aunctims t money=
nedi m_dA exchange
a tandazdk value

DciniKons d Mane

Descniptiive a Legal Common

Functional defaiti _detinition AcceptabiLity-
Definition_

y loulbon, by_Enapp| bg keyns

etc- Mansaall
EAalkon,
lhomas ete.
 Date
Page

Desciplie 0r tunctioma Aofinition-

(asAcondingto loulbon, Money ay 6e

defined as Hhe mmeans _ayaluatom
Omc pay moet"

(b Ace tz Haat ley uwithens Money is

h a t money_does

LegalDeftnitian
(a AccO2ding to napp nyi ng-
Luthich is_doclanedeystate _a 2

hecoM es MONey-

Common_Aceptaeility Definitions
La Aca to_Keynes Manej is taat fy
delier_d_urtaich debt tantnad
and Paie contracts ane clischongel
Andin theShape J utaic a
ton genenal puwnclhasing--
POueN_iS eld.

ch A to Seligman- Money_isOne
ing hat possesses geneznal.
alcepabiLiy..
 Date
Page-

Eyolutian sf Money
Commodih Metal Papen LaediZ£
mone monef Mone money
rokd, Silver| hegus and)|
dnat

Repasentatie) Inconventible
CBank Wote) CBank Note)
Con v e r i b t e
Bank Note)

LOnBumpion Tapiaal Onmamena

Laood Caoods Aaticles

Rice, Salt, Fish Cmetal, Eni ves) Preious metal

Mone

(1Metallicmoney nold, Silvrer_ete

Fullboolie Coins
(Eace Value coins= metalvalue coins)
Token Moneg
Lfaevabe fioin> metalvalue cf coin)
4n OL COuntoy_aLL cin anetokea
mong-

2 Papen Money (Nokes isswd 6 gareMMNeut

RepnLseutative_Moneg-
1 415 l y 6acked by egualmettalit 10sesnce)
 Date
Page

The holdn dfa bank mote_cam easily

aet_ it_c ested into mettalic LCnold, sile
2n demandL

Convesti6le DMonep
Lam be cmcenkd into gpld Silver 6ut
au HheBe males izsued by govemnent
not illy backed by golcl)

Tncanaeszfióle _Money-
Lhe fate value af such ra.aney Is
Gavatea taan tae vaue dfthe pape
ex- he valu c he papan_df_Z10D_s
mi but pwnchasing pourea is egual ta
L00 Aecause it_thas delanod os
Legal mone4 0 nediumd exchange

2ulewse tese ype _cf roaney_ina.

oun dailyLile/bu3intLs.

(3)Bank Money Lalso calted Cradit

Ceegu
Daatt
Bills _f exchange.
(4)PLastic Money ( Smart cand Credit_can
Debzt Cards ete
 ate

_(5Legal lendos Money

LHae nottB amd oins isSued a /
Govt.
anc Hae_Cental_tQank _2ne legal-lcnda=
MO2ey
imileAlegal endr m0Ney
nlimied Legal Lendor 2monesy-

C Standand Nonep=
SLardand morey Is-
Hhat_ whichtaValue d Oods and
aa arell as_allothor bnms_d_mony
Pices_dfgoo&_anA money_Ore
Leams_c upec
e Standasd MOney is-alu2ays- ade.
Lnliniea Legal Cadar 2nons
7Cammodty mo2ny=
Sat nimal gema Jolds7lez ct
C8)EIduciay Money
Llaecuz dnatk, banknotes etc.

(9-2 Wean Money

Deposits goe: boncds, onds et
cam be_easil canvend into money
 Date
Page-

Functions of_Mone
The main_tuncton df money_in
a n eonomi system i s t o z i l i t a t e the
exchamge f Goods n d senvices
andL help inCanaying Lut brade.
Smodnly-
At Cam be diide into
Paimany_funchons
Secondary Functians
Contingent functins
Primon Eunctims
MonG as a NLdium_f exchange
Money- A easne_f Value

Secondany funions

Stone _af valu

Tnansfea_E Valu
Standand df_dofleresl/delazed paymont
Dette ad o9 delayed paymnti.
ane unick made some tme in futw
eg- Tnveimaent, Stack exchange etc.-
Mone isHan ink utuich connectr he
valu Dday uwita Hao se d e.
futuJL
 Date
Page

LOntingentFunctions

BAsis d f CaediE
Baris df_Aist eibtion Social Tocome
Basis maximum Safistactton and
POduin
Helpfl in_making. Capital iquid
Note Paue Einging has clasiftec
funcTons d mey into t o o
Oaoad g£LOups
S t a i c Funcions
SAatic nctions are.
ose wich uelp the openafion dA tne
economy but_HLsA do 0tCheae
more 20eut_1n h e ecanomy - Likee
medium_ dE_eXLhange meagieO VLalue
StDne Vlu and m L a l u e cE
deftesad payment_efz.

ynamic_Eundions
he dynamic tunctions
CAe hase by_wrich money_aciely
intluEnces tlae econ0mic Sygtem
haough 1 s _impact an paice AeNe
ntzet a t e calume dfp0cluctiome,-
istaibuhion d_awealm nsincomes
ec
TH E
 MONE7. AAD BANKI
Date.
Pcge-

CHANGES IN THE NALUE OF MoNEY_

L1 THE AMTITY THEORY Of MONEY=

Valuu Ot money= Punclhasing poue dH}

Sewicek_in o CoUMAAy-

* Gzenenal Paice l e r e l -
Hypothetical easa
Ag_oenallPniccsfoa some S e t g o o d s
Sesvice j n a n ecOnomy ouing
GAe i n t e n a l . ( D i l y P a i c e Incdex)_

THE CASH TRANSACTION AP ROACH-

CFISHER's GuANTITY THEDRA Of MoMEY
uanty_ men.cjis-he_pAain _dutepmi
af h e pice_onel D Hae value cF money

ing Fisthea, Oth iings emainig

Unchasaged as the guanitgdd m oney
cincuationincaases, Hhe fezite lrielalBo
inaeajez in dine cd pnopoion a n d Ha
Malue AOmey AeCAeae a n d i c e een sa.
mon 1S medtu exhange.

Mtney Supey
i n m anket
Picelovel value d onej-

TTLTITILI
 Pa

PT= MV-+ MV
P=Pi celenel 14p he value T
total money
quandiy dflegalLende moreg
V=he veloity d cinculatfon d oney
MEtota quamity g Caedi narney-
y'
namLaction pLatonmed 6y money
pT= demand fOa aney-
MV = Supplg_af mone-

MV M'V

f M4M2auatiy fmaney aeaat uill

vaay so Hhe paice eiel (P)al&ovany
becae the
e toh_one ihect ly Raopaianate
but 4 v )andT)should 6e unchanged
Assumptian =

( P is pass+ve -fa.ctans in-he eg a exchange

wtaic is aftecked iby tA OLh tactos
i V_and Are indpemdmt and Lonst
2 mins_indepemdeut Aned_coasdant.
)Exis-le ce a fu emplaymemt in tlhe economy
V)Appeicable inLong u n -
(v SuppRg _moneyis
isasSumedas-
exogenOuskg deenminece. C O n s t
i l at isassumed h a t demamd foa nnoney
is Ro p0ational t o n v Valne omsaHons.
 Date
Page

Citicism
guaR_amd
SeAz Can
mof e
Ohen tings
ing_ne
6e Unchanged
measune yalue A OnH
i Fails o Cacuhaen)

vAegleclss Loteaet a t e
-funcian-
w eglectstpne e value
vi V bot Lanjtat
Cvii DnaealistioAssume:tion -6y y n

inappLicable in mndern dYnan

econo my

P=F(M
Ye
P
Ppce
orel
e
m,
o u a i f y ot mone
one
 Date

THE CAMBLIDG E_fQUATIONS

THE CASH BALANCE APPR0ACH
girenby- Cambnidgeecon@mists Moa3hall
Pigouy RotLatsan and Eynes-
Likevaluefheoy hey egandedHe deeniana
Of H value cf meney in Lennsd SupplyA
lemand.

Demand DY ManRH
Nalue maney- majon deAenminamds
Cdetezmine 6
Sppq Aoa mone

Demand foa mmej

fna cansactima motiiee
fmePAecoutfonay dMoRie(emengency use
mediu o exchamae
ase-
Stoaod valua-

The Cambdge eg shous hatiflae

3upAly_d money a t a poiit df Hme I s
given so Aha valuedf nmoneg- I S -
deteaatned 6g tha- olemand to caAh
balan ce
 Dete

Ca baLamce appLcch instcps-

12Demand fo oone
P
7Pepple o l 2ediuse h ia expemoitune.
Linoade to nare Aange caa inodigs

Pice erel
Value
Value d mon

r kPy
M Mone elemamded
2Pozuian d ominal mLome (Hold by indiy
Paice- lecel
Real_naional pacome
P 9 2 Noina mationa i come

Md=k Py.
Ma = Money emaidod
Les ASSume M= Spply d f
momy-
eXOgemeously:olLM minaed
M= M Lhre LesipaL baak
kP Y_=M
eqlutäónium
 NT Natiamal lnConre

M=PY
Paie
evel

M 2

MS> fiyee
E,g E fguiLbaiu.
MS Tndsplamdendt atM,(MS) we Úance
MS 1ncaeasezi fn M excesS is neafcal
As A n Cneases piceLavceh_9ises
e. EFz
each
AL M2 Cms) ne eenmins PaicePa
M=k P y eloiy da-
mon
Af we aold_mOne Hae elocityless
S 4l e s s V wil_i»CnLase

V
M= P y
P=MV o r P1 M.

is_c0nstt
CoNsttE
fullQaploymect
IReal NI Hxa So P is dekamiu 6s
pply2Y-nnonG

Change in 2t4 mone C h a nge fn pice lrel,

 Caiiism-

_Cansztaut

S Y re no
K
Negect Pnteaeit r a
demancfo monej
eglet S p e c u l a f i i e
) l e v e l d o e s n ' E measume
punclhasig
Pice
POwresA
m- MOneASuPPg-
) T o n much enpluas
-) eglecl_-Sauings - investment

2ansactiaasApproach VsCaal balante.

ppaoak

Sinilanities
Same cáodusion
Phopoadima jedatis2ship t6ctoceu 2
2uua
anni
i

money and paice Leel

invense ilahonstaip. bectreda he2y a
MOney aNmd e valiurdf 0oney
Qsmlan eg"_cnb dHaancca ans fre k 3

fish ens eg P=

Robetsan eg" 9P =
kT

50
R POtian f h e hdding- mon vhich
Peopl wats
f o hold, "
 Date

Dissimalaritiees

Vand k_diffeaeat
functiam d ome
Asaenis apRaoach medium dfexchage
Camóaidge Sfaae d xalue.

Flos amd SAok-

fslhessMm i s a flouo_Lomcep-
lamÖAidg=MONey_Is
atur Price lecel P is
EEiShexs=P is Aceaage PAice lecel
Canbaidge=Paied EnaLgands-

iLezeutin natre
nealistic mechaaisticAppa0ac)
Eis = Seems-
(kisdopenods upaa 6e aarisu
ECam 2ealiti
people

SupPply aand demarned

fis emplasiscs n-sppyd me
=emphasices on demamdamd.suPpy=
Cam
d 0oney 6otta

Aatue d 7
T á tolal aant g 0 d s and semsi ces
ERsh= sfoe:
T sPhe f n a l goods exchange
ECam
anm
mmone
 Dote
Coge.

Castu ealance aPpaDcd

Superiosity- Aepaoach.
Scea Z2ansacAONs

QIComplePe_Zh eo3y
Simple. eguations-
( D1s.cands a_ciaculatiomS
uevelocityof Canteo
CoNlep
e l o l c dt o LheShont peniood
Based o n micno factons
2 Applicable wadea_all_cimu2stamces
POAe ealiskc. by usinga Subgeclive
facton ladepend on thepsycholegy d
PeOple )
THE KEYNESIAN_THEORY OF E AMD
PRICES
APpAOachi

The eetaf a_change in

haguany A
MONey-ba pices IS 1ndinect_and nor
Pnepatianal

Integhated. mOte=moneetanyHaeo and-

calne Haeoa

honey is 0 t oeutaal.
moneH
moneySLpply-aftcct_enly he absolecte
pice escel- elaice Paice loce
money is ax a link betocca pnesent aid.
Futwe

KEYNES's REEDRMULATED UANTITY THEO2y

Of MONE Y_

Kegn es SlhouwsHho elationship Aetuse Li

mon eg- Odpuut and pice
moneH
ae Hheosy pointk aut laaE
Sodomg- as heneiS LAMemploymeat-
Output ill_clhangeastae same
paoponion Qs-Has 2uani dF Oney-
O when Hheruis All_emplaymet,
paices will Change jn hesame
P a o p O a i o n aa s equanti 44-
PAONey-
 Assumptiona>
prodduchion_anein
A L -factos f
eectl elastic Suppl SoLong a s
LUNeMPloY2mas.
eneis anY

2)AIL unemployed tactons a n e luomogencou

pLaleLtlg- i i s i b l eancinlezchongeal6le.

COnstant 2 e h a n tp scale S o
Le) h a
hene e
t p 2 i c e s d o n 0 t aise_0 fall
AsDwlpu nCnease

(4|Eectie demand andqty a montg

n th PO2Ran.
S a m e ONtan
Change
heae a e _ a n y unenpbyea4
Solong-

Explanaion
fmOneyuill aLect
Change in 2ty
Aaice luelindihectyHaough s2aBe
a_ntesest. -

Sn He case _lnemplaymouut

mt RoT lavestmerct T ELfective 4

domana
Duput
moeases
Jnco me

Cmp loyment-
 te

o1e

Lo he Case_ df
wnempyYACn
Paice&_do not_aise wita incn0
inputput
tull emplaymA
Pices uill change in Hhesame proponHON-
s 2ty_

Output Crre Pie C ee

-AH

Qutp Pntce
A (B

modeL a kegnisian heoy df money_and

Puies in kams
ad4gg2gatesuppy Ls
Hemand-E
AJg gae -

P
P
P,
 Dote
Page

Supeafoait4 he kenesian heoy=

DHe establishes odizect 2elatioamship.
betneen 2uuantit_af manEy a m d
Peaices en-PrapontionalrelatiosLip)

RoL
egaatel monetary heosy
VaAue heosy_OG
morej-
ELUemply
Rmploymtm is an CXLepfim-
studgSAidg He elatTonship hefuRA-
money amd fPAice. UNd umempky=
amcl Aill eaplerymlsat
B A£latiom COmes Llaea i l l
emplaymet gieacheA

Citicism df Kepnesiau brony

atune Azed
lices_an not izedA
Mon Aaas intEluence m- OAisnalL
nleme
 Date
Page

THE SUPPL OF mONEY

he team Supply_df noneyis syaonmos

sullh HImns as money stock
mon Suppl Stnck mOney

he supply_A_200ney_a any_MOmemt

is the tota l2 amt _money intlha

econo -
M1-- A cc o taadiHonal_and keynosia-inkig=
Suppl a money is
CuANen uithpubLic and
e Demand olepoix oitH commeace*al Banks.

Accto Fiedman
The SLLpply monegIS=
Cazeny_ÍH thoPubli
Demand doposik
Cedit_sith bank
Tme deposAts

The Suppl moneyis M2 pluus

deposik af Saving 6anks

uildinAsocieties
OOn CUsociatioms
opOSÁ* ofofhun wudit anct Fnanuial Httion
 Dato
Data
Pege.

Detenminants mone Supp

(sPubic's TDeine to Hold Cuneng
Ratio
4 Reguined Reseace
Smpontant-delaminant onySUpply
Publi's lasiaa o:hold cunnentH-
An Lndia th SLB (SAatutp s4 O casta aaie odepoi fsin
Li uldity 2atio) is: t e amt Commencial anks alsO dlcaminc
he bank_taas o
meney ich tine morOe- suppLy.
Paying to
eposihAs, PubLi tnolcding T Cacdit creatian y baake
lhis t e has been tize d by Ras Supp 4 Moneqv
larhich mandatosy n iold 6y
bank Bank Lanynot Supply a l l Pub Licholding aeAit coatiam by bank-
mAne tn public as he loan. Suppi 2mane T

SLR is_also stand o Secondos

Lountaie3
(4 Hfgh Poweand Moned
Resenwe atiora inotthan
This is_also knDen as monetass bae
(2 he Level o-f Bank Peseues= Hem i s ihe sum d Commencial Bank
a e e s and cunaeny leash )held ey
Sn Tndia CRR has 6een ixed Public.
yCentna Bank, uaich is e
Compulsoa amt i c h Hha bamk (SLnteaeadt }natetPoan T mDney supply 1
has Lo keep 208Lave in h (6. ocomeT 1f people Sae moneT moneg supply
CEtaal bank (7|-Buines Ackity t amt Loan î -
This 1s als0llrimpotant mon SupplgI
deteminant f suppy_f MOng (8)|elocit4 CA cintulationA money
4f CRR _money Supply also affcct theSupplg
CRR L MDney Sup ply i n tla e Conomy
 Mone Multiplie becsme cguai tnilhs initial dposi
Mone muli|iplien0a depositE
EBLExLes Pescne
muultiplie MeAsuhestlue amouutt
is dilL2 ae befueen-
H a a t t u e6 o n k s a n e
m o n y c a e a t ein the f 2 n m - actiae21tsure and o l a l 2eguiscd
able tp 9eLL e.
DF_depositz with euceayLnit
a Money Actual Pezss
1
Money m u l t i p i e s =
LRR RR ER = AR TRL2
= Atual Pezezuce= lotz0 equized
wheas RP z Requiaod ZLOSLLe
seie.
Lee E Legze aeeuixed 3eLce.
LeR =_CRR SLR a tads pacess_f_lepesÍs ane
Caedit Cacation-continustil tle
2saces wth Commeatdal. b a nk
S mOn multiplien= Zes2

CREDIT CREA TION by CoMMERCIAL

BANk
f LRR 254
So moneg- LaedLt c2aeatia isthe most
sigpmicant ncianAE he
25
Comnen ciaC banks Commendal
6anks alep dpoitsAnd lenc
Loam and 2dvapces
Depsip caeationcomesto
Paocess aey_Oeate r n
Lndwlaea -fetal eait aeseauas ypes df AopOÄs:, 2namag Paimay
 Dato-
Pago
Dato
Pege
and Secondak dpAkits DD= PD SD
Cuation-
Hssumpion ton Gidit
Enocem f man eLneation_
ALL baning Systtm is one_unit/ba Pyamp-
SupposL initial dzposik in banks is
AI sansactHons L Payment_0n_natcipt RA 1000 and LRR iS 1D%_
u mada tunouglh bank0nu
mot in_Casa Means banks AL AAuiad n kue
only100-as Lasa alsLa_and
Legal Restnoeaior n theeh_lend
banks
400
Suppose Lond 900
4 isminimum phaphim and dn nnt lend hismaney_b_
tDtal dumand dapesit o Aving amount in laa
Cpmmehcial cank As Nise RathaL Hhy DpLn the aLLountk in
t s leg.ally Lompulsony ton_hA he mames DoenatAA ho
banks keep t h A uihith
clidd tu Lentnal tonk.RRT hAneeh dhey Lik.
LRR CRR+SLR 2.SppSA boAnotas uthdna th
Lnini amount_ 00 fn maing
iimasy_dsposit Pzumasy_dipDt Paymenfs-
K an inikal dopoit dHe Hs all e ~hansacians @ nauded
peaplit bank HhnoughHhe ban he Money-
SeLondarydposit-Thest deposits sQontby th honnnwins lme
ane Lheacted bythe way_ back iato banks in h tm
O depasit fhese ho hor
RDemand dyasitAr amt HLat acuiutdHi_phymevcit lincnase
Cam be wth nan damandl ty chugue)
on
oem andl depoyit bank Oy 9o0.
 Date.
Pogo
Date
Poge-
SuppoNa,himany Aepotit100D
Reene2atio
10 High Paennd Mant
Deposits Loan Lash High potard Money 0POutetul
RouLnd
Phase YLRR-L01 lmone 4thaD_that_Luanualy
that has fpec issudo OylAa
1000 900 100 Lhovt and Lenthal hank RRI)_
00 810 90
2 Some pDntian
8 10 729 81 i s (uAnLny is
3 kent along with ae Pbli
ust his is Lept_as tunda i
100D
esLe Bank
toa DD:10000 Lan-3000
H CtR
Nok Dep2sit Chiatim lamis
Pnd e i a l cask H= High powoud hone
1DSLAue dLlome_egual fo_ tle C:lwataiyitu Public LPapa masyttoin
initia dLposit R aout:_and bank dapois oika RRT_
Fonrmula damad dapositi- h Hhe Aum otal mone
pupaikd. oiaHe _public anddao
OoDPO+ SD hunds hanks S Jemed, as
Púmory dpokt +Rtandasy dupit Pouthhul Man At is mail
DD y P_
RR
REsE unds is ct to tupu--
Eguadiantan igueaaut total diposit- i Statutary Rezthe tund bana
Tatal dlepaik TntiaLdipaht Ymoniy whid is uih h enthal bank RR).
mubtipliv
Exces RUAue lynd. LER)