Summary Economics-- chapter 2 money (quick revision+ key points)

FYJC Economics (Maharashtra State Board)
Chapter 2: Money – Complete Study Notes


1. Barter System
Barter system means direct exchange of goods for goods without using money.

Difficulties of Barter System
• Lack of double coincidence of wants

• Lack of common measure of value

• Difficulty in storage of goods

• Indivisibility of certain goods

• Difficulty in making deferred payments


2. Meaning of Money
Money is anything that is generally accepted as a medium of exchange and measure of value.


3. Evolution of Money
• Barter Money

• Commodity Money

• Metallic Money

• Coin Money

• Paper Money

• Bank Money

• Plastic Money
• Electronic Money


4. Functions of Money

Primary Functions
• Medium of Exchange – Money is used to buy and sell goods and services.

• Measure of Value (Unit of Account) – Value of goods and services is expressed in terms of money.


Secondary Functions
• Standard of Deferred Payments – Money is used for future payments.

• Store of Value – Money can be saved and used in the future.

• Transfer of Value – Money helps transfer purchasing power from one place to another.


Contingent Functions
• Basis of Credit – Banks create credit on the basis of deposits.