Home — Essay Samples — Life — Personal finance — Money. It is used as the source to fulfill basic needs and is also a source of comfort in life. Candidates have to raise and use private funds to finance their campaigns. Without money people cannot live healthy. To many people, the fact that the government does not back the currency with anything tangible seems implausible and insecure. If the price level is 1, then the value of the dollar is 1. People normally do not spend all their incomes on the day they receive them. In this essay, this essay will discuss about the important of saving money. In the home, they use many equipments that maybe cost a lot of money for them such as: television, refrigerator, air-conditoner…. The money you place in a safe or a checking account will still be available to you a few weeks or months from now. However, despite displaying clear terms on our sites, sometimes users scan work that is not their own and this can result in content being uploaded that should not have been. Firstly, money should be spent on one's necessities compared to luxuries. Anything that is widely accepted as a medium of exchange can serve as money. Since the purchasing power of money and the price level vary inversely, stabilization of the purchasing power of a nation”’s money requires stabilization of the nation”’s price level. The more liquid an asset is, the more quickly it can be converted into cash and used for either purchases of goods and services or purchases of other assets. Hazlitt writes in three sentences by using elongated syntax and parallelism in his essay to give the impression of a rant so that the audience has no way to argue back with his views. When the consumer price index or ”’cost-of-living”’ index goes up, the value of the dollar goes down, and vice versa. Some people like to spend their money as soon as they earn it, while others think it is better to save their money for some time in the future. If we have sick, we should need money to but medicine or see doctor. By excluding currency held by banks when determining the total supply of money, we avoid this problem of double counting. You can view our terms of use here. Then they can offer interest on the MMMF accounts of the shareholders (depositors) who jointly own those financial assets. Money Definition M 2 A second and broader definition of money includes M 1 plus several near-monies. When the value of the dollar is declining rapidly, sellers do not know what to charge and buyers do not know what to pay. It goes without saying that all services and products are quantified in terms of green bucks. Check your understanding of this reciprocal relationship by determining the value of $ V and its percentage rise when P falls by 20 percent from $1 to .80. By Abbi Media. If you use part of this page in your own work, you need to provide a citation, as follows: Essay Sauce, The Functions of Money. In equation form, the relationship looks like this: $ V 5 1y P To find the value of the dollar $ V , divide 1 by the price level P expressed as an index number (in hundredths). L egal Tender Our confidence in the acceptability of paper money is strengthened because government has designated currency as legal tender . But if we counted currency held by banks as part of the money supply, the same $1 would count for $2 of money supply when Emma deposited the currency into her checkable deposit in her bank. With money as an acceptable unit of account, the price of each item need be stated only in terms of the monetary unit. The checkable deposits of banks and thrifts are known variously as demand deposits, NOW (negotiable order ofwithdrawal) accounts, ATS (automatic transfer service) accounts, and share draft accounts. It can be tempting to order take out at the end of a long day, or … About 49 percent of M 1 is in the form of checkable deposits, on which checks can be drawn. Levels of liquidity vary radically. Learn more about our Cookie Policy & Privacy Policy. Paper currency is dirty and is a major transmitter of disease as it goes from unwashed hand to unwashed hand. The infamous post”’World War I hyperinflation in Germany is an example. The use of electronic money is quite effective because it is fast and convenient method of payment. If you ask the government to redeem $5 of your paper money, it will swap one paper $5 bill for another bearing a different serial number. As a medium of exchange, money allows society to escape the complications of barter. When we want to measure and record economic value, we use money as the unit of account.The unit of account function of money refers to the fact that the prices of different goods are expressed in a common monetary unit. Nothing more! First, currency held by the U.S. treasury, the Federal Reserve banks, commercial banks, and thrift institutions is excluded from M 1 and other measures of the money supply. They accept the deposits of households and businesses, keep the money safe until it is demanded via checks, and in the meantime use it to make available a wide variety of loans. C urrency: Coins 1 Paper Money The currency of the United States consists of metal coins and paper money. Second, there is a loss of purchasing power when the house is sold because numerous fees have to be paid to real estate agents and other individuals to complete the sale. Hire writer now. Along with the other determiners and rightly spend money, life is beautiful! Writing essays for money gives you the freedom of working from home. T wo Qualifications We must qualify our discussion in two important ways. What do you feel are the right uses of money? By not backing the currency, the government avoids this constraint and indeed receives a key freedom”’the ability to provide as much or as little money as needed to maintain the value of money and to best suit the economic needs of the country. Also, money is a tool for personal development; by means the reactions we have about money we can perceive the real value of it and the value of ourselves. Apart from money, factors are many that contribute to one's quality of life. ANTIMICROBIAL ACTIVITY OF SILVER NANOPARTICLES BASED ON THEIR SHAPES, A Clockwork Orange (Burgess) and The Butcher Boy (McCabe), Impact of racial stereotypes/racism on, self-esteem amongst African-American students regarding standardized testing. T he Purchasing Power of the Dollar The amount a dollar will buy varies inversely with the price level; that is, a reciprocal relationship exists between the general price level and the purchasing power of the dollar. The Ascent Of Money : A Financial History Of The World Essay 1443 Words | 6 Pages. Also excluded from the money supply are any checkable deposits of the government (specifically, the U.S. Treasury) or the Federal Reserve that are held by commercial banks or thrift institutions. Specifically, each bill contains the statement ”’This note is legal tender for all debts, public and private.”’ That means paper money is a valid and legal means of payment of any debt that was contracted in dollars. This website uses cookies to ensure that you get the best user experience on our website. Such pricelevel stability (2”’3 percent annual inflation) mainly necessitates intelligent management or regulation of the nation”’s money supply and interest rates (monetary policy) . The amount of money available to households and businesses is of keen interest to the Federal Reserve in conducting its monetary policy (a topic we cover in detail in Chapter 33). Nor will government redeem the paper money you hold for anything tangible, such as gold. The person cashing a check must endorse it (sign it on the reverse side); the writer of the check subsequently receives a record of the cashed check as a receipt attesting to the fulfillment of the obligation. Money is not everything in life but it is true that money can buy lots of things. When money rapidly loses its purchasing power, it loses its role as money. Money is important in most people's lives. At the extreme, a country may adopt a foreign currency as its own official currency as a way to counter hyperinflation. To conclude, I would like to reiterate that though money is eminent, when it comes to livelihood and quality of life, it would be dogmatic to assert that wealth is the most important than other factors involved in a healthy living. Figure 31.1a shows that M1 is about equally divided between the two components. "IELTS Sample Answer & IELTS Preparation". People can, of course, choose to hold some or all of their wealth in a wide variety of assets besides money. Fifty-cent pieces would disappear from circulation very quickly! By virtue of long-standing business practice, currency and checkable. ©2020 Essay Sauce / Terms of use / Content policy / Privacy policy. But writing and mailing a check for a large sum is commonplace. This exemplifies the innate quest within the public to be extravagant. Thus, in equation form, Money, M 2 5 M 1 1 savings deposits, including MMDAs 1 small-denominated (less than $100,000) time deposits 1 MMMFs held by individuals In summary, M 2 includes the immediate medium-ofexchange items (currency and checkable deposits) that constitute M 1 plus certain near-monies that can be easily converted into currency and checkable deposits. Money is used to do a lot, you use it to buy a house so you have somewhere to live instead of living under a bridge, you use it to keep your car running properly, and without money a lot of people wouldn’t be happy. The result? Money and Prices The purchasing power of money is the amount of goods and services a unit of money will buy. (But private firms and government are not mandated to accept cash. Commercial banks (”’banks”’) and savings institutions (”’thrifts”’) provide checkable deposits. The government has never decreed checks to be legal tender, and yet they serve as such in many of the economy”’s exchanges of goods, services, and resources. Figure 31.1a shows that currency (coins and paper money) constitutes 51 percent of the M 1 money supply in the United States. As we describe the various forms of money in detail, take the time to compare their relative levels of liquidity”’both with each other and as compared to other assets like stocks, bonds, and real estate. I am looking for advice, a title, and criticism. How To Write Money Amounts In An Essay Or how to write numbers in a paper . Investing. Give reasons for your answer and include any relevant examples from your experience. The attractiveness of gold, from an aesthetic point of view, and its resistance to corrosion are two of the properties which led to its use for monetary transactions for thousands of years. In Fred's Blog . Learn by example and become a better writer with Kibin’s suite of essay help services. Jewish Teachings About The Right Use Of Money The major religions of the world all teach that God is good and he therefore wants every human being to lead a good, happy life. Live life to the fullest – The real joys of life come with money. It consists of two components: ”’ Currency (coins and paper money) in the hands of the public. ”’ Unit of account Money is also a unit of account . 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