By going through these Maharashtra State Board Class 11 Economics Notes Chapter 2 Money students can recall all the concepts quickly.
Maharashtra State Board Class 11 Economics Notes Chapter 2 Money
→ Concept of Money : It is an important concept. It has brought a revolutionary change in the economic life of human beings.
Modern economy is dependent on money. Barter system is replaced with introduction of money.
→ Difficulties in Barter System :
- Problem of Double Coincidence of wants
- Lack of common measure of value
- Difficulties in storage of goods
- Indivisibility of certain goods
- Problem of making Deferred Payments
→ Definition of Money : “Money is anything that is generally acceptable as a mean of exchange and
at the same time acts as a measure and a store of value.” Prof. Crowther.
→ Evolution of Money :
- Animal Money
- Commodity Money
- Metallic Money
- Metallic Coins
- Paper Money
- Credit Money
- Plastic Money
- Electronic Money
→ Types of Money :
- Animal Money : E.g. Cow, Sheep, Goat, etc.
- Commodity Money : E.g. Feathers, Shells, Grains, Fur, etc.
- Metallic Money : E.g. Gold, Silver, Copper, Aluminium, etc.
- Metallic Coins : E.g. Full bodied coins → Face value = Intrinsic value
E.g. Token coins → Face value > Intrinsic value
- Paper Money : E.g. ₹. 1, ₹. 5, ₹. 50, ₹. 100 – notes, etc.
- Bank Money (Credit Money) E.g. Cheque, Demand Draft, etc.
- Plastic Money : E.g. Debit Cards, Credit Cards
- Electronic Money (E-Money) : E.g. Mobile, Tablet, Smart Cards, Computer, Digital Wallet.
→ Legal and Non-legal tender money :
- Legal Tender Money is backed by law and it cannot be refused by anybody, while doing any transactions. E.g. all coins and currency notes prevailing in the country.
- Non-Legal Tender Money is not backed by law. It can be refused. It is evolved just to make transactions easy between buyer and seller. It is also called as optional money.
→ Qualities of Money :
- General Acceptability
→ Functions of Money :
(A) Primary Functions:
- Medium of Exchange
- Measure of Value (Unit of Account)
(B) Secondary Functions:
- Standard /Deferred payments
- Store of Value
- Transfer of Value
(C) Contingent Functions:
- Measurement of N.I.
- Basis of Credit.
- Imparts liquidity to wealth
- Estimation of macro economic variables
→ Black Money :
It is a money earned through illegal activity. It is collected to evade tax. It encourages illegal activities like bribery, black marketing, hoarding, etc. It leads to political, economic and social instability in any country.
intellectual – Process of thinking and understanding; fundamental – basic, mechanical – use of machines, revolutionary – complete change, circulation – distribution, barter system – exchange of goods for goods, coincidence – by chance, perishable – gets spoilt easily, bulky – large, inconvenient – difficult not possible to do, indivisible – cannot be separated, deferred – in future, civilization – human, social and cultural development, evolutionary – development, protohistoric period – a period between prehistory and history, metallic – use of metal, precious – of great price, uniformity – similarity, affixed – attach, authorities – power, face value – exchange value of money, intrinsic value – value of the money, substitute – option, monopolized – controlled, denominations – face value of money, handling – to deal, monetary – dealing with money, digital wallets – electronic device for doing electronic transaction, durability – used for long period of time, cognizability – to be recognised, portability – easy to carry, homogeneous – same group, stability – fixed, medium – means to do, value – use, commercial – business, liquid asset – asset which can be converted into money, budget – estimated income and expenses set over period of time, illegal – not as per law, black marketing – trade using illegal activities, hoarding – holding the resources, bribery – influencing other by offering money, obstacles – problems, instability – not fixed, demonetization – change in current forms of money