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Unit 3 The M startary Sector Objectives ?Define capital and explain the requirements of money ? 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 support for money argon determined ?explain the instruments of monetary insurance Definition of coin money 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 everyday of exchange. If people want to trade, thither has to be a ikon coincidence of wants. This means on that point is a neediness to find a match amidst what each of the two traders wants to master and what each wants to offer in exchange. Barter is a condemnation consuming process and not suitable for a new-made economy where a big range of goods and operate are produced. Requirements of Money Objects that we can use as money should action the following requirements: ?General acceptability: It should be desired and original by all as medium of exchange. ?Durability: Money changes hands all the time and and then it should not withstand easily. ?Manageability: Its mass should be delicate relative to its rank, i.e. it must 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: It should be limi ted in supply because the relative scarcity ! of a currency determines its tax. ?A relatively fixed value: Its value should be fairly constant. Money loses its value and get agent 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. ? specialism 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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