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November2011 Macro Economics


Money can be defined as an object that is readily accepted from
anybody as full payment for purchase of a certain commodity or for service
rendered by an individual. This may take the form of metal coins, paper
money issued by the government, banks or personal checks.

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November2011 Macro Economics
Barter System- the direct exchange of goods for goods, services for
services, goods for services and services for goods. It is the earliest
system of trading.

With the passage of time, the barter


system presented difficulties which tended to slow
down exchange. This lead to the use of one object
as a medium of exchange for other goods came
into use. This system can be known as Money
Economy.

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November2011 Macro Economics
1. Burdensome

2. Inconvenient due to difficulty in finding goods which one directly


needs.

3. Does not have proper measure for the goods being exchanged.

4. Indivisibility of some goods

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November2011 Macro Economics
1. Commodity Money

2. Metallic Money

3. Representative Money

4. Paper Money

5. Bank Drafts or Checks

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November2011 Macro Economics
• It must be portable. •It must have elasticity of supply.

•It must be homogenous. •It must be stable in value.

•It must be durable.

•It must be recognizable.

•It must be divisible.

•It must be malleable.

•It must possess general acceptability.


Cmrmiranda PowerPoint Presentation
November2011 Macro Economics
There are many uses or functions of money and these are money as a:

Medium of Exchange. The money is the medium of exchange because it is


always in the middle between the buyer and the seller.

Standard Value. This is being performed when all articles or services are
given a value in terms of a certain number of units of one particular type of goods.

Standard for Postponed Payments.

Store of Value. It becomes a store value when an amount of it is kept for a


period of time.

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November2011 Macro Economics
The Monetary Unit
This refers to the type of money expressed by law as the standard
value and the circulating medium. It is made of a particular metal or commodity with a
fixed weight and fineness.

The System of Coinage


The government has undertaken sole responsibility for the manufacture
of metals into coins to avoid difficulties such as varied sizes and shapes, designs, weights
and counterfeiting.

Circulating Media
All matters related to the issuance, value, conversion and control in
the use of paper bills or metallic coins are
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November2011 Macro Economics
Monetary Reserves
Important in controlling credits. The security of the depositors
and as an instrument of control by the government in cases of economic instability
due to too much credit or to an imbalance in foreign payments.

Local Tender Quality Money

*Legal Money Tender- a money which is declared by the law as


acceptable for payment of debts, both public and private.

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November2011 Macro Economics
Has several types namely;

Monometallism. A commodity standard based on one metal.

Bimetallism. Based on two metals which are standard money at a fixed value in terms
of one another.

Symmetalism. Based on a single metallic unit which is a mixture of different metals


legally proportioned.

Composite Commodity / Commodity Reserve Standard. Still on the planning


stage consists of an assorted list of staple commodities which will serve as the standard
unit.

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November2011 Macro Economics
The paper standard is one which does not use gold or any metal as the basis of value.
This is also called as Credit or Fiduciary Standard because it is dependent on the people’s trust in
the government.

*Flat Standard because the money circulation assumes its value by decree of the
government.

*Money Paper Standard because the government supervises the circulation of the
money to the public.

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November2011 Macro Economics
The Central Bank of the Philippines is chiefly
responsible for the implementation of our monetary
policy and is the sole authority on money matters as
embodied in the Section 2, Articles of the Amended
Republic Act 265. It regulates the circulation of money in
order to help trade and industry meet their needs. It is
the only agency which can issue money in the
Philippines and is responsible for maintaining the
stability of peso so it will always be accepted within
and outside the country as a medium of exchange.

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November2011 Macro Economics
ESO
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November2011 Macro Economics
Monetary Policy can be defined as set of guidelines and plans
of action designed to achieve stability and reliability of the financial
system so that it automatically responds and adjusts to the changes
and dynamics of an economy.

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November2011 Macro Economics
The primary objective of the monetary policy is to provide
financial stability that promotes growth and development of the economy
with minimal inflation.
The success indicator of monetary policy is the rate of inflation in lower
result.

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November2011 Macro Economics

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