Money

  A capitalist economic system is one characterised by free markets and the absence of government intervention in the economy. In practice a capitalist economy will need some government intervention, primarily to protect private property.  Features of a capitalist economic system Economic freedom . Individuals free to set up business and provide the goods and services they want. Consumer sovereignty . Consumers free to decide which goods and services to purchase. Limited government . Government intervention limited to the protection of private property and provision of public goods. Finance sector.  Capitalism requires a developed banking and financial system which can provide loans to companies and banking services to households. Profit motive  is seen as important for enabling an efficient distribution of resources and encouraging innovation and responsive markets. Market forces . Goods and services are distributed according to ‘the invisible hand of the market’ – ...

  The evils of money are shrouded behind a monetary veil, and what really happens behind the veil is sometimes quite different from what appears to take place on the surface. This extreme view has been discarded. Now economists regard money not merely as veil but also as an extremely valuable social instrument promoting wealth and welfare. But money which is a useful servant, often misbehaves when it tries to act like a master. This leads to a number of economic and non-economic defects of money. Economic Defects: The economic defects are as under: (1) Instability in the Value of Money: The first drawback about money is that its value does not remain stable over time. When the value of money falls, it means rise in the price level or inflation. On the contrary, rise in the value of money means fall in the price levels or deflation. These changes are brought about by increase or decrease in the supply for money. Large changes in the value of money are disastrous and even moderate ch...

  Static Role of Money: In its static role, the importance of money lies in removing the difficulties of barter in the following ways: (i) By serving as a medium of exchange, money removes the need for double coincidence of wants and the inconveniences and difficulties associated with barter. The introduction of money as a medium of exchange breaks up the single transactions of barter into separate transactions of sales and purchases, thereby eliminating the double coincidence of wants.  (ii) By acting as a unit of account, money becomes  a common measure of value. The use о money as a standard of value eliminates the necessity of quoting the price of apples in terms of organes, the price of organes in terms of nuts, and so on. Money is the standard of measuring value and value expressed in money is price. The prices of different commodities are expressed in terms of so many units of dollars, rupees, pounds, etc. depending on the nature of monetary unit in a country. The ...

  1) DURABILITY:- Money needs to be long lasting. 2) PORTABILITY:- Money should be easy to carry around, convenient and easy to use. 3) DIVISIBILITY:- Money should be easily broken down into smaller denominations. 4) HARD TO COUNTERFEIT:- Money shouldn't be easily faked or copied. 5) GENERAL ACCEPTABILITY:- Money should be generally accepted by a population. 6) VALUABLE:- Money should be one which generally hold value over time.