Concept of money
We call money to any active or accepted as a means of payment or measurement of value by economic agents for their exchanges and also fulfills the function of being a unit of account and deposit of value. Coins and bills in circulation are the final form adopted by economies as money.
Properties of money
It is a unit of account, which allows to fix the prices of goods and services. Without him we would not know how much they cost.
It is a means of payment, since it is accepted by all people to pay for the purchase and sale of goods and services.
It is a store of value, which means that it keeps its value over time, because it has the capacity to buy goods and services in the future.
Types of money
1- Money sign: this is represented by coins and fractional notes in which the value of the material with which it was made is much lower than its value as money. That is to say that these coins and notes receive extremely high denominations in comparison to the paper or metal with which they are produced. In the case of the money sign, the value is granted by the entity that backs and issues it.
2- Money merchandise: in this case, money can be used as merchandise for consumption or trade, or to use it as a means of exchange. In one way or another, this means of change has the same value.
3- Money of legal tender: this is the money that a certain government recognizes as acceptable to cancel debts and also as a means of payment. Thanks to legal support, national money has the possibility of being accepted in most exchanges.
4- Bank money: in this case, the money is generated by bank deposits and is composed of: term deposits, savings deposits and demand deposits.
5- Money I will pay: this money is based, in most cases, on the debt of a credit institution. The bank deposits on demand, which are transferred with checks, belong to this kind of money. When an individual signs a check, what he does is that the debt is transferred to the bank, who will give the money to the individual who has received the check.
6- Electronic money: this is the money that is only exchanged electronically, for this purpose the computer and internet are usually used, so the user never comes into physical contact with it.
7- Credit money: this consists of a paper whose issuer can be a bank or government and is the one that guarantees it to pay in metal its equivalent value.