The group also includes a freshwater types such as bright red bloodworms that live in mud and are used to feed aquarium fish. The likelihood of a double coincidence of wants, however, is small and makes the exchange of goods and services rather difficult. But that is not where the problems end: Even if you find someone with whom to trade meat for bananas, you may not think a bunch of them is worth a whole cow. For example, I accept U. Examples of commodity money are gold and silver coins.
Twenty-dollar bills are all the same size and shape and value; they are very uniform. In contrast, livestock, which has seen limited use as money in less sophisticated agrarian societies, never become widely used as money in modern economies. Hence, services cannot be stored. Easy flow of foreign funds: Since 1991 foreign funds is easily flowing into India. Durability - It should last a long time 3. . As a medium of exchange, money has to be continually handed about; and it will cause great inconvenience if every person receiving it has to scrutinise, weigh and test it.
A lot of Chinese p … eople mostly businessmen live in the country as well. Few Lenders: Thelenders in the Indian Money Market are few. It must not be easily counterfeited. Scarcity - Scarce enough to be valuable, not common such as sand or pebbles on a beach 5. DivisibilityThis second characteristic means money can be divided into small increments that can be used in exchange for goods of varying values.
Therefore, a well developed money market will have a highly organised and developed commercial banking system. Nowadays, the value of money not just the dollar, but most currencies is decided purely by its , as dictated by inflation. When deciding how to allocate your wealth, think long and hard of what you consider wealth. Even better, a long trip to market does not threaten the health or value of the bill. So expect physical characteristics similar to what the previously mentioned races have. Something has to be a form of payment, a constant of exchange.
It should be commonly acceptable for the sale and purchase of goods and services. Refined metals, such as gold, silver, copper, or nickel, have historically taken center stage as money because they are extremely durable materials. If we use diamond as money and by chance it drops from our hand and breaks, we will suffer an enormous loss. So why do we continue to use something that has 3 flaws? Money market securities typically return less to investors than long-term investments in stocks or bonds, so they're usually not seen as ways to build wealth over a long period of time. Shortage is mainly due to low level of savings, inadequate bankingfacilities etc. This is not the case with precious metals.
Treasury or through a bank or broker. To sum it up, money market instruments are seen as a safe place to put money because of their high liquidity, short maturities, and safety relative to other types of investments. High volatile money market: Theimportant feature of the Indian Money Market is the seasonalstringency of funds. Thus, they are not transportable as say a paper dollar or coin that can be carried in our purse. The lack of transferability of bartering for goods, as you can see, is tiring, confusing and inefficient. In India, the development ofcommercial banking is uneven and not adequate. There are two types of financial markets.
Write one page summary of the following questions: 1. Furthermore, money is an easily transported store of value that is available in a number of convenient denominations. To get your meat, he or she must find someone who has bananas and wants bunnies. Fiat money developed because gold was a scarce resource and economies growing quickly couldn't always mine enough to back their currency supply requirements. Divisibility is one reason why metals, such as gold, silver, copper, and nickel, have been widely used as money throughout history.
The above properties of money will certainly help us uncover more truths, but there are still problems: What happens if money no longer holds its value? It leads to unhealthycompetition among the segments. Sand is abundant and cheap. Acceptability - Everyone must accept it to purchase goods and services 2. We earn it and spend it but don't often think much about it. Let's take a closer look: Durability: If money stays the same in terms of shape and substance over time, it is said to be durable. It should not deteriorate rapidly with the passage of time.