Macroeconomics: Theory and Policy

11

Money

After studying this topic, you should be able to understand

• Money evolved in a set pattern in the different societies as commodity money, metallic money, paper money and deposit money.
• The conventional approach to the definition of money lays emphasis on the medium of exchange, function of money and the importance of money as a measure of value.
• The Gurley and Shaw school of thought argues that the definition of money should be a weighted sum of the different financial assets.
• The Central Bank view is to include in the definition of money not only all the existing means of payment but also the credit flowing to the borrowers.
• Traditionally, only currency and demand deposits were included under money.
• The primary functions of money ...