MONEY

(AE-111) FUNDAMENTALS OF
AGRICULTURAL ECONOMICS

SUBMITTED TO:
MR. ASUTOSH PANIGRAHI (GUEST FACULTY), DEPT. OF
AGRICULTURAL ECONOMICS

SUBMITTED BY:
BASUMATI MARNDI (231210133)
KAPURA MARNDI (231210134)
GEETANJALI MURMU (231210135)
PRABHUDATTA MAHALIK (231210136)
PRASANJIT MAHALI (231210137

CLASS: 1ST YEAR 1ST SEMESTER B.SC.(HONS.)AGRICULTURE

SEC: B GRP: 7
INTRODUCTON TO MONEY
• “Money can be defined as anything that is
generally acceptable as a means of exchange and
that at the same time acts as a measure and a
store of value”.– By Crowther.

• “any thing which is widely accepted in payment

for goods or in discharge of other kinds of
business obligations”. – By Professor D.H - -
Robertson.
WHAT IS
MONEY?
• Money is a universally accepted medium of exchange,
serving as a store of value and a unit of account in
economic transactions.
• It represents a system of tokens or symbols that hold
value and facilitate the exchange of goods and services
within an economy.
• Money can take various physical forms, such as coins
and banknotes, as well as digital representations like
electronic bank balances or crypto currencies.
• At its core, money enables individuals to overcome the
limitations of barter by providing a standardized medium
for trading goods and services.
• It simplifies transactions, promotes specialization and
division of labor, and facilitates economic growth and
development.
FUNCTIONS OF MONEY
Money serves three primary functions in an economy:

1 • Medium of Exchange

2 • Unit of Account

3 • Store of Value
1. Medium of Exchange:
Money facilitates transactions by serving as a widely accepted
medium for the exchange of goods and services. Without money,
individuals would need to engage in barter, which is inefficient due
to the lack of a common measure of value. Money streamlines
transactions, making trade easier and more efficient.

2. Unit of Account:
Money provides a common unit of measurement for expressing
the value of goods, services, and assets. By assigning prices to
various goods and services in terms of money, individuals can
easily compare their relative value and make informed decisions
about allocation and consumption.

3. Store of Value:
Money serves as a store of wealth, allowing individuals to save
purchasing power for future use. Unlike perishable goods or assets
subject to depreciation, money retains its value over time,
enabling people to defer consumption and accumulate savings.
This function helps facilitate investment, lending, and long-term
planning within an economy.
 EVOLUTION
BARTER
SYSTEM

OF
COMMODITY
MONEY

MONEY
METAL
COINS

PAPER
MONEY

BANK
DEPOSITS

DIGITAL CURRENCY
AND
CRYPTOCURRENCY
 BARTER SYSTEM
• In ancient societies, people relied on barter to
exchange goods and services directly.

• Barter involved trading one good or service

for another without the need for a
standardized medium of exchange.

• While effective for simple transactions, barter

systems were limited by the double
coincidence of wants—both parties had to
desire each other's goods or services for a
trade to occur.
 COMMODITY MONEY
• In the early stages of development especially
in the hunting stage of human development,
commodities like, Bows, sea shells, beads,
arrows, furs and shin etc. were used as a
medium of exchange.

• Later on in the pastoral stage, animals such as

sheep and cattle (goats and cows) were used.

• The use of commodities and animals as

money suffered from certain difficulties such
as no standard unit of measurement, its
supply were subject to large and abrupt
fluctuation and these cannot serve as a
satisfactory store of value.
 METALLIC MONEY:
• with further progress of human civilization,
commodities and animals were replaced by
precious metals such gold and silver for being
used as money

PAPER MONEY:
• Paper money took the form of bank notes
which is issued by the central bank of a
country ( e.g. Reserve Bank of India in India
and Federal Reserve of USA)

BANK DEPOSITS AS MONEY:

• it refers to the Bank deposits (especially
demand deposits) which people hold with the
commercial banks and against which cheques
can be drawn. Or bank money (i.e. bank
deposits) or credit money has become a
significant part of the total money supply.
Chequeable bank deposits held by public in
 DIGITAL CURRENCY AND
CRYPTOCURRENCY
Digital currency and cryptocurrency have emerged as innovative forms
of money in the digital age, offering unique features and capabilities.

• Digital currency refers to any form of currency that exists purely in

electronic or digital form, with no physical counterpart.

• They can be transferred electronically between individuals and

businesses, making them suitable for online purchases and digital
transactions.

• Digital currencies are typically centralized and controlled by a

central authority, such as a government or financial institution

Examples: Digital currencies include electronic bank balances, credit and

debit cards, mobile payment apps like Phonepay, Paytm etc.

• Cryptocurrency is a type of digital or virtual currency that uses

cryptography for security and operates on decentralized networks
known as blockchains.

• Cryptocurrencies are not issued or regulated by any central

authority, such as a government or central bank.

Examples: Bitcoin (BTC) is the first and most well-known

cryptocurrency, created in 2009 by an anonymous person or group
known as Satoshi Nakamoto. Other popular cryptocurrencies include
Ethereum (ETH), Ripple (XRP), Litecoin (LTC), and many more.
 FORMS OF
MONEY

MONEY OF ACCOUNT

LIMITED AND UNLIMITED LEGAL TENDER

STANDARD MONEY

TOKEN MONEY

BANK MONEY
MONEY OF ACCOUNT:
it is the monetary unit in terms of which the accounts of country are kept and transactions
settled, i.e., in which general purchasing power, debts and prices are expressed. The Rupee
is for instance, our money of account, Sterling pound of Great Britain and Yen that of Japan.

LIMITED AND UNLMITED LEGAL TENDER:

A legal Tender currency is one in terms of which debts can be legally paid. A currency is
unlimited legal tender when debts upto any amount can be paid through it. It is limited legal
tender when payments only upto a given limit can be made by means of it. For instance,
rupee coins and rupee notes are unlimited legal tender in India. And so is the half-rupee
coin. But coins of lower denominations are only limited legal tender. They are legal tender
only up to ten rupees.

STANDARD MONEY:
standard money is that in which the value of goods as well as all other forms of money are
measured. In India, all prices of goods are measured in terms of rupees. Thus, rupee is the
standard money of India. Standard money is always made the unlimited legal tender money.
In old days, the standard money was a full-bodied money, i.e., its face value was equal to
the real or intrinsic worth of the metal it contained. But now-a-days in almost all countries
of the world, even the standard money is only a token money i.e., the material contained in
it is very less than the face value written on it. Thus, the rupee in India is available in the
form of paper notes which have no intrinsic worth.
TOKEN MONEY:
It is that the metallic value of which is much less than the real or intrinsic worth
of the metal it contains. Rupee and all other coins in India are all token money.

BANK MONEY:
Demand deposits of banks are usually called Bank money. Bank deposits are
created when somebody deposits money with them and when they advance
loans to the businessmen and traders. Bank deposits are generally divided into
two categories.
• Demand deposits: those deposits which are payable on demand through
cheques and without any serving prior notice to the banks.
• Time deposits are those deposits which have a fixed term of maturity and
are not withdrawable on demand and also cheques cannot be drawn on
them.
However, since even time or fixed deposits can be withdrawn by foregoing some
interest and can be used for making payments, they are included in the concept
of broad money, generally called M3. Even the latest addition to the forms of
money are credit cards issued by the banks extensively used for making
purchases.
MONEY SUPPLY:
Supply of money: it refers to the stock of money held by the public at a particular
point of time for transaction and store of wealth.
• i.e. The supply of money means the total stock of money (paper notes, coins
and demand deposits of bank) in circulation which is held by the public at any
particular point of time.
Components of money supply are:
i. Currency held by public
ii. Demand deposits
• Again it needs to be noted that (like difference between stock and supply of a
commodity) total stock of money is different from total supply of money.
• Supply of money is only that part of total stock of money which is held by the
public at a particular point of time. In other words, money held by its users (and
not producers) in spendable form at a point of time is termed as money supply.
• The stock of money held by government and the banking system are not
included because they are suppliers or producers of money and cash balances
held by them are not in actual circulation.
• In short, money supply includes currency held by public and net demand
deposits in banks.
SOURCES OF MONEY SUPPLY:
GOVERNMENT
• Which issues one-rupee notes and all
other coins

RBI (RESERVED BANK OF INDIA)

• Which issues paper currency

COMMERCIAL BANKS
• Which create credit on the basis of
demand deposits
SIGNIFICANCE OF MONEY:
• Money has facilitated
exchange and promoted
trade
• Money promote division of
labor and productivity
• Money promotes saving
• Money helps in maximizing
satisfaction or profits by
consumers and producers
• Money can help in reviving
the economy from
Recession or Depression
THANK YOU