The concept of money

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2 years ago

The concept of money is all the things owned by an individual
or group of individuals, and it includes currencies, real estate, commercial materials, cars, furniture, and other properties that are classified within the money.

And money is defined as currencies, whether in the form of coins Or papers, or anything like securities, such as bonds; Where money is used to buy things or to implement various investments.

Among the other definitions of money is the official and legal thing that consists of banknotes, currencies, and sukuk, and is the primary means of financial trading according to the determination of the governments of countries; Because every country in the world has its own money.

Types of money:
Money is divided into a group of types, which are:

《1》 Money in terms of stability:

it is the first type of money, and it is divided into two parts:

●Fixed money: it is money that does not accept transfer from one place to another. Unless the original image has been changed. Meaning if this money represents real estate, it must be sold; In order to convert it into notes that can be moved and carried from one place to another, examples of fixed money are buildings and lands.

●Transferred money: It is money that accepts the transfer and remains in its original form regardless of whether it is moved or changed its location. Examples include metal money and gold jewelry.

《2》 Money in terms of dealing:
it is the second type of money, and it is divided into two parts:

●Similar money: It is money that has a similar one in the market, and there is no discrepancy in the value of individual units, and it is not monopolized by merchants, and it depends on the use of measures of weight, such as: numbers, measures, and weights, examples of which are wheat and barley.

●Valuable money: it is money whose individual values ​​vary, which leads to merchants monopolizing it, such as real estate.

■ The functions of money:

The main use of money for all individual consumers is related to its role in paying the price of services and goods, but there are many basic functions of money are:

• A medium of exchange:
which is the role of money in the processes of commercial exchange; That is, in the purchase and sale of products and services; Before relying on money, barter was the primary process for people to obtain their daily needs, such as replacing flour with sugar, but nowadays money has become the main and main medium of commercial exchange; Individuals go to stores and stores and pay merchants money for their purchases, and merchants must accept this money as the accepted and main means of commercial exchange.

• Unit of Account:
It is the use of money as the appropriate criterion for measuring the value of goods and services that individuals buy from the market, for example if the price of one kilo of wheat equals 5 dinars; In this case, the unit of calculation for the value of wheat is understandable to the buyers; Because of their awareness of the nature of the money that contributed to allocating the price of wheat, but if the merchant asks for a kilo of sugar in exchange for a kilo of wheat, then consumers will be confused; Because they did not understand this unit of account because it was not previously traded in the market.

• Store of value:
it is the ability of money to preserve its value. That is, the value of money does not change with the passage of time, for example if an amount of 100 dinars is kept in a financial safe or bank account, then its value will remain constant for very long months, and it will not be subject to any changes in its value.

■ The importance of money:

The importance of money has emerged in human life. As a result of the diverse needs of individuals; Whenever one of them is obtained, the more the human goal is to search for others, and these main needs are the need for food, drink, housing and others, and with the passage of time the need for money appeared to keep pace with the needs of man. Especially after the consumption needs became more than the productive capacity, and each individual did not remain dependent on what he produced only, but rather became the need to consume what others produce, which led to the strengthening of the role of money as it contributes to achieving compatibility between the needs of individuals related to the increase in the scope of commercial exchange, And it is based on the exchange economy, which contributed to the distribution of labor, and supported the ownership of productive means, and other economic activities.

■ The importance of money in the economic sector is summed up according to the following points:

○ Money is the easiest way to exchange goods; Because it contributes to expanding the reciprocal range between individuals and states.

○ Money plays a productive role in society; Because it helps to increase private production in the economy.

○ Money is associated with all parts and components of the economic system; Because it contributes to creating the appropriate conditions to fulfill the special needs of individuals, whether they are necessary or unnecessary.

○ Money affects the rate of economic growth; Due to fluctuations and changes in purchasing power.

○ Money contributes to strengthening the economic relations that bind individuals; By relying on his influencing role.

■ Causes of a decline in the value of money:

Money suffers from a decline in its value; Because of the impact of the inflation factor within the private economic sectors in many countries, and the following are a set of reasons that explain this:

○ The profits decline significantly.

○ Deterioration of the ability to use private energy in production.

○ Reducing the exchange rate of countries ’currencies, in exchange for increasing the issuance of bank notes, known as Bank-Note.

○ The high import rate, the decrease in the export rate, and the less dependence on saving; For business development.

○ The negative impact of foreign debts owed on countries, and the increase in interest rates.

○Deficit balance of payments; As a result of the apparent gap between foreign imports and private domestic resources in the countries.

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