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Unit 3 The M unrivaledtary Sector Objectives ?Define specie and explain the requirements of silver ? detect the functions of money ?Discuss the functions of a central bank and commercial banks ? take in the money creation process ?Explain how the supply of money and the use up for money ar determined ?explain the instruments of monetary insurance policy Definition of coin funds is anything that is generally acceptable in exchange for goods and go. patronage Economies Barter is the direct exchange of one good for a nonher without development money as unremarkable of exchange. If people want to trade, thither has to be a figure coincidence of wants. This means on that point is a take in to find a match amidst what each of the two traders wants to support and what each wants to offer in exchange. Barter is a term consuming process and not suitable for a red-brick economy where a big range of goods and function are produced. Requirements of Money Obje cts that we can use as money should carry out the following requirements: ?General acceptability: It should be desired and legitimate by all as medium of exchange. ?Durability: Money changes hands all the time and and then it should not yield easily. ?Manageability: Its mass should be delicate relative to its rank, i.e. it moldiness be portable.

?Homogeneity and divisibility: The various denominations of a currency should be made of the same material and grammatical construction the same. ?Recognisability: It should be easily recognizable and distinguishable from other materials. ? apprize: I t should be limited in supply because the re! lative scarcity of a currency determines its take to be. ?A relatively fixed value: Its value should be fairly constant. Money loses its value and get position due to inflation. Functions of Money Money has several basic functions in the economy. These functions distinguish money from other assets such as stocks and bonds. ? durability of exchange: We offer money in exchange for goods and services and it makes this exchange...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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