Money, Savings And Investment

money is defined as – the current medium of exchange in the form of coins or banknotes is counted as money. It was first defined by professor walker.

It means the value of the money. Purchasing power is the value of a currency expressed in terms of the amount of goods and services one unit of that currency can buy.

Money is used as a standard for future payment. Money is a convenient form of storing wealth.

Price of any commodity is its value in monetary terms. It makes economically calculations easy.

Income means money received, especially on a regular basis, for work or through investment. The money out of someone's income not spent on consumption is called savings.

Money is one of the greatest inventions of man. It helped in solving many problems related to barter system and helped in easy transactions.

The word money is derived from the Latin word Moneto

It is the surname of Roman Gog ‘ Junto’

The most important function of money is that it acts as Medium of exchange

It is freely used in exchange of goods and services

Money is a convenient from of storing one’s Wealth

It is because it can easily be converted in to marketable asset such as land, jewelry etc.

Savings is inevitable for capital formation and economic growth.

Savings is directly linked with investment, greater he saving more the investment in an economy.

1. Moneta - Money

Moneta is the Latin term from which ‘Money’ was derived

2. Store of Value – Function Of money

Money acts as a medium of storing an individual’s wealth, as it can easily be converted in to marketable asset such as land, jewelry etc.

3. Savings- Contribution to economic growth

Savings is directly linked with investment, greater he saving more the investment in an economy.

4. Money – Fundamental Invention

5. Barter System - Old system of exchange of goods

It is a system of exchange of good or service in return of desired goods and services, no money was used for trading.

Professor Walker defined money as “Money is what Money does”, i.e. money is the function of its characteristics.

Following is the importance of Money:

a. it’s a medium of exchange

b. it helps individual’s store their wealth

c. it is used as a standard for deferred payment

d. it’s a measure of value

Money is significant in all economic activities such as Savings and Investments, and in today’s world, no economy can function smoothly without money.

It is a system of exchange of good or service in return of desired goods and services, no money was used for trading. Barter system of exchange was used in ancient time. When the concept of money was not properly developed in these times barter system was used.

Money is used as a standard for future payment. Business nowadays works on credit cycle, where credit is money (good or service) utilized in advance with a promise of future payment. In such transactions money is the standard tool.

Savings is inevitable for capital formation and economic growth. The portion of income not spend on consumption is called savings.

Whereas investment means addition to the existing production capacities. Both savings and investments are interlinked.

Following are the functions of money:

a. Money is used as a standard for future payment. Business nowadays works on credit cycle, where credit is money (good or service) utilized in advance with a promise of future payment. In such transactions money is the standard tool.

b. Money acts as a medium of storing an individual’s wealth, as it can easily be converted in to marketable asset such as land, jewelry etc.

c. It is freely used in exchange of goods and services, hence it’s a medium of exchange

d. It is a tool used for measurement. Money is the value of any goods and commodities. Its price is its value in monetary terms.

Money is significant as it has influenced all the branches of the economy, such as, production, consumption, distribution, exchange and public finance.

Money is also needed in important economic activities such as Savings and Investments, and in today’s world, no economy can function smoothly without money.

Savings is inevitable for capital formation and economic growth. The portion of income not spend on consumption is called savings. Whereas investment means addition to the existing production capacities, such as buying of plant and machinery. Both savings and investments are interlinked.

If the savings are good, it will lead to good investment potential and hence, leading to economic growth.

Savings is done by the consumers, whereas investments are made by entrepreneurs.

The system of trading, were money is not used for exchange of goods and services is known as barter system. It is a system of exchange of good or service in return of desired goods and services, no money was used for trading.

For example, if Rahul has a banana and his friend Ramesh has an apple, and they both exchange their commodity in return of their products, then such co-incidence of want, and trading is referred to as barter system.

In my locality, there is no exchange made without the use of money. Money is commonly and widely used as a medium of exchange and any economic activity and transactions are conducted through the use of money.

Commodity money is money whose value comes from a commodity of which it is made. Example, if a coin is made of gold , the value of gold(say Rs 100) and the extrinsic value of money say Rs 10), will be known as commodity money, (Rs 110).

Savings is done by the consumers, whereas investments are made by entrepreneurs. Savings is inevitable for capital formation and economic growth. The portion of income not spend on consumption is called savings. Whereas investment means addition to the existing production capacities, such as buying of plant and machinery. Both savings and investments are interlinked.

Such activities help to generate wealth in economy, through employment and thus both consumers’ who create demand for goods and services and the entrepreneurs who fulfill this demand are performing activities to develop the economy.