Tag: functions of money

Reserve bank of India has the sole right to issue currency notes of various denominations except one rupee notes under Section 22 of Reserve bank of India Act. The one rupee note and coins are issued by ministry of finance and it bears the signature of Finance Secretary.

The variable reserve ration is a new method of credit control used by central banks in recent times. The variable reserve ratio device springs from the fact that central bank, as a Bankers Bank, must hold a part of the cash reserves of commercial banks.

$MONEY\space MULTIPLIER = \dfrac{1}{LRR}$

The primary functions of money are medium of exchange, measure of value, store of value, and standard of deferred payment. Durability is a characteristic or property of money, not a function itself.

Liquidity refers to how easily an asset can be converted into cash. This depends on both the maturity of the asset (time) and the existence of secondary markets where the asset can be traded.

The cash balance approach (often associated with the Cambridge equation) focuses on the demand for money based on the desire to hold money for transactions and as a store of value.

The primary or original functions of money are those that define its basic purpose: serving as a medium of exchange and a measure of value.

The primary functions of money are universally accepted as being a medium of exchange and a measure of value.

Prof. Kinley classified the functions of money into primary, secondary, and contingent functions, specifically identifying four contingent functions.