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Unit 3 The M wizardtary Sector Objectives ?Define specie and explain the requirements of coin ? detect the functions of money ?Discuss the functions of a central bank and commercial banks ? take in the money creation process ?Explain how the supply of money and the acquire for money argon determined ?explain the instruments of monetary polity Definition of coin specie is anything that is generally acceptable in exchange for goods and go. patronage Economies Barter is the direct exchange of one good for a nonher without development money as mean(a) of exchange. If people want to trade, thither has to be a fork-like coincidence of wants. This means on that point is a guide to find a match amidst what each of the two traders wants to hold back and what each wants to offer in exchange. Barter is a measure consuming process and not suitable for a forward-looking economy where a big range of goods and work are produced. Requirements of Money Objects that we can use as money should cooperate the following requirements: ?General acceptability: It should be desired and accredited by all as medium of exchange. ?Durability: Money changes hands all the time and and then it should not resist easily. ?Manageability: Its mass should be delicate relative to its rank, i.e. it essential be portable.

?Homogeneity and divisibility: The various denominations of a currency should be made of the same material and grammatical construction the same. ?Recognisability: It should be easily recognizable and distinguishable from other materials. ? apprize: It shou ld be limited in supply because the relative! scarcity of a currency determines its jimmy. ?A relatively fixed value: Its value should be fairly constant. Money loses its value and get advocator due to inflation. Functions of Money Money has several basic functions in the economy. These functions distinguish money from other assets such as stocks and bonds. ? force of exchange: We offer money in exchange for goods and services and it makes this exchange...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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