Money

MONEY GROUP -04 AMITA RANI JAY GANDHI KIMAYA M NITIN MALIK SONU T URVIE GUPTA

AGENDA Introduction Functions Importance Money Supply Money Demand Role in Economic Development  Monetization & Economic Growth      

INTRODUCTION  Money Anything that is accepted as a medium of exchange & at the same time acts as a measure and a store of value.

FUNCTIONS  Medium of exchange  Measure of value  Standard of deferred payment  Store of value

IMPORTANCE  Facilitate exchange & promote trade  Promote division of labor & productivity  Promote savings  Helps in reviving the economy from recession  Helps in maximizing profits by consumers & producers

MONEY SUPPLY  Total sum of money available to the public in the economy at a point of time.  Elements; a) Currency with the public b) Demand deposits with the public

MEASURES OF MONEY SUPPLY    

M1 or Narrow money M2 M3 or Broad money M4

 M1=C + DD + OD  M2= M1+Savings with post office savings banks  M3= M1+Term Deposits with banks  M4=M3+Total Deposits of Post office savings organizations

Factors Determining Money Supply  Bank Credit to Government  Bank Credit to commercial or Private Sector  Changes in Net Foreign Exchange Asset

DEMANDS FOR MONEY Liquidity Preference: Demand for money to hold or the desire of public to hold cash. Keynes’ Theory  Transactions Demand  Precautionary Demand  Speculative Demand

Speculative Demand for Money

Determination of Rate of Interest

ROLE OF MONEY IN ECONOMIC DEVELOPEMENT

 Promotes productivity & economic growth  Promotes investment  Forced savings  Inflationary financing

MONETISATION & ECONOMIC GROWTH  Subsistence sectornon monetized  Introduction of moneymodern ,industrial and agricultural sectors  Increase in saving

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