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    1) The document defines key terms related to money such as legal tender and near money. It discusses the history of money from barter systems to modern currencies. 2) Barter systems had issues with unequal value of exchanges and lack of a store of value. Scarce metals and coins were early forms of money before the introduction of paper money and modern currencies. 3) Money has characteristics like acceptability, durability, and portability. It serves functions as a medium of exchange, standard for deferred payment, unit of account, and store of value. Money includes representative money like checks, fiat money determined by governments, and commodity money based on assets.

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    MONEY[1]

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    1) The document defines key terms related to money such as legal tender and near money. It discusses the history of money from barter systems to modern currencies. 2) Barter systems had issues with unequal value of exchanges and lack of a store of value. Scarce metals and coins were early forms of money before the introduction of paper money and modern currencies. 3) Money has characteristics like acceptability, durability, and portability. It serves functions as a medium of exchange, standard for deferred payment, unit of account, and store of value. Money includes representative money like checks, fiat money determined by governments, and commodity money based on assets.

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    5 views3 pages

    MONEY

    Uploaded by

    Sara
    1) The document defines key terms related to money such as legal tender and near money. It discusses the history of money from barter systems to modern currencies. 2) Barter systems had issues with unequal value of exchanges and lack of a store of value. Scarce metals and coins were early forms of money before the introduction of paper money and modern currencies. 3) Money has characteristics like acceptability, durability, and portability. It serves functions as a medium of exchange, standard for deferred payment, unit of account, and store of value. Money includes representative money like checks, fiat money determined by governments, and commodity money based on assets.

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    of 3

    GRADE 10 BUSINESS/ OPTION ECONOMICS

    MONEY

    DEFINITION OF TERMS

    LEGAL TENDER: money which must be accepted by law in business transactions or in a


    settlement of debt.

    NEAR MONEY: anything that functions as money and is easily converted to cash eg. foreign
    currency, savings account, fixed deposits etc.

    WHAT IS MONEY?

    Money is defined as anything that is acceptable as a means of exchange. It is a legal tender.

    HISTORY OF MONEY

    ➢ BARTER

    The exchange of goods and services for other goods and services.

    DIFFICULTIES WITH BARTER

    • Unequal value of exchange


    • Double coincidence of wants
    • Impossibility of savings (perishability)
    • Problem of portability

    (REFER TO PG. 187 IN COMPREHENSIVE TEXT)

    ➢ SCARCE METAL
    ➢ COINS
    ➢ PAPER MONEY
    ➢ MODERN FORMS OF MONEY

    (REFER TO PG. 93 IN STUDY GUIDE)

    QUALITIES/CHARACTERISTICS OF MONEY

    • Acceptability
    • Homogeneity/Uniformity
    • Durability
    • Divisibility
    Comprehensive Economic for CSEC
    Economics for CSEC Examinations
    Longman Economics for CXC
    Economics: CSEC
    Economics Study Guide Page 1
    GRADE 10 BUSINESS/ OPTION ECONOMICS

    • Portability
    • Limited in supply (scarce)

    (REFER TO PGS.190 IN COMPREHENSIVE TEXT, 110 IN ECONOMICS FOR CSEC, 191 IN ECONOMICS:
    CSEC AND 94 IN STUDY GUIDE)

    FUNCTIONS OF MONEY

    • Medium of exchange
    • Standard of deferred payment
    • Unit of account
    • Store of value

    (REFER TO PGS. 189 IN COMPREHENSIVE TEXT, 93 IN STUDY GUIDE, 191 IN ECONOMICS: CSEC AND
    111 IN ECONOMICS FOR CSEC EXAMINATIONS)

    TYPES OF MONEY

    • Representative money: indicates that the holder is entitled to a share of something of


    value eg. cheques and credit cards
    • Fiat money: money whose value is determined by legal means (government)
    • Commodity money: money whose value comes from a commodity of which it is made
    eg. gold and silver coins.

    DEMAND FOR MONEY

    The demand for money is the total amount of money that the population of an economy wants
    to hold.

    REASONS/MOTIVES FOR DEMANDING MONEY

    Precautionary

    Transaction Speculative

    (REFER TO PG. 193 IN ECONOMICS: CSEC)

    Comprehensive Economic for CSEC


    Economics for CSEC Examinations
    Longman Economics for CXC
    Economics: CSEC
    Economics Study Guide Page 2
    GRADE 10 BUSINESS/ OPTION ECONOMICS

    THE MONEY SUPPLY

    • The money supply is the total stock of money in the economy at a particular time. The
    money supply is determined by the central bank.
    • The money supply is defined in terms of M0, M1 and M2
    • It is classified based on its liquidity. Liquidity refers to how easily you can convert assets to
    cash.
    • NARROW MONEY: Not held in banks and can be converted to cash for immediate use
    (very liquid)
    • BROAD MONEY: Money not available for immediate use (less liquid)

    MONEY SUPPLY

    M0: narrow money M1 M2: broad money

    -notes and coins -notes and coins -M1


    -chequing deposits -chequing deposits -foreign currency
    -travelers’ cheque -travelers’ cheque -treasury bills
    -demand deposits -demand deposits -certificates of
    -savings account deposit
    deposits
    -cash in bank vaults

    M1= M0+ savings accounts + cash in bank vaults


    M2= M1+ foreign currency +treasury bills+ certificates of deposit

    REFER TO PG. 95 IN STUDY GUIDE

    Comprehensive Economic for CSEC


    Economics for CSEC Examinations
    Longman Economics for CXC
    Economics: CSEC
    Economics Study Guide Page 3

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