What is currency? What is the function of money? If you are wondering, please check out the article below. Today, tindung will analyze about currency.

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Currency (currency)


Currency in English is Currency. Currency can be defined in many ways as follows:

The concept of the Mercantil School

Money is like wealth. If a country wants to get rich, it must accumulate a lot of money.

The concept of the Peasant School

Money is just a fiction. Money is only used as a lubricant to lubricate the operation of the economic machine. The machine itself is not affected by any currency.

The view of N. Gregory Mankiw

Currency is an asset that can be used immediately to conduct transactions.

The concept of Frederic S. Mishkin

Currency is anything that is generally accepted in payment for goods and services or in the repayment of debts.

Distinguish money from wealth and income


Is the net value of the property owned in monetary terms at a certain point in time. Note that wealth is a cumulative quantity (like the amount of water in a lake).

A household’s wealth includes tangible assets such as houses, land, automobiles, and other sustainable consumer goods and financial assets such as cash, savings accounts, bonds, etc. stocks and bonds.

All values ​​are considered assets, and liabilities are referred to as liabilities. The difference between total assets and total liabilities is called wealth or net worth.

Income (income):

Is the amount of money earned in a unit of time. Income is a quantity that flows through an organization of time like the flow of a river.

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What is currency?

Money is a historical category, it is a spontaneous product of the commodity economy, the product of the growth of forms of results. At the same time, it is also a product of the growth of contradictions between labor and the social division of labor in commodity production. The establishment and growth of money has always been accompanied by the birth and growth of production and exchange of goods.

The role of money

The task of money in the market economy manifests itself in three aspects:

First: money is a necessary means to expand and grow the commodity economy.

C. Marx said that people cannot proceed with the production of goods without money and its movement.

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The role of money when money participates in the performance measure and means of circulation is to make the measurement and expression of the results of goods easy, convenient and uniform, making the movement of goods easier. movement of goods in circulation proceeds smoothly. On the other hand, using money in production and business makes it possible for producers to account for costs and determine production and sales results, accumulate money to carry out production and business.

Second: currency is a means to implement and expand international relations.

In the context of the growth of the commodity economy and the transition to a market economy, money is not only a means of acting on socio-economic relations within the country, but also a special means to carry out and expand international cooperation.

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Combined with foreign trade, international payment and credit relations, the task of money develops to become a vehicle for the implementation and expansion of international relations, especially for international relations. The multifaceted relationship between countries around the globe creates and grows, helping the integration trend in the fields of socio-economic, financial, monetary, banking, scientific and technical cooperation between countries.

Third: money is a tool to fulfill the purposes of their consumers.

In the context of a highly developed commodity economy, most of the socio-economic relationships are monetized. Every individual, organization, agency, etc. cannot escape from the money relationship. bad. In the condition that money becomes a tool with universal power to handle and release ties arising in the social economy not only within the national but also international scope.

Therefore, money can satisfy all goals and interests for those who hold money. As long as there is a commodity and monetary economy, the power of money will still exert its power.

Functions of money

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From the point of view of market economists, money has uses as a medium of exchange, a medium of storage, and a business of account.

Means of exchange

A medium of exchange is something that is universally accepted by everyone in exchange for goods and services.

Money is a medium of exchange. When you buy any goods, for example a shirt, the shop owner gives you the shirt, and you pay him money. It is through the transfer of money from the buyer to the seller that the transaction is made. If there is no money, the exchange goods become much more difficult and expensive.

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Means of storing value

The fact that money acts as a medium of exchange goes hand in hand with its role as a store of achievement. People will only hold money when they believe it will have value again in the future, so money is able to function as a medium of exchange only if it also serves as a medium of preservation and storage. achievement.

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With this use people have the option to keep some wealth directly in money. Of course, money is not the only store of performance in the economy, because a person can transfer purchasing power from the present to the future by holding other assets.

The above article has told you about what money is and the role of money. Thank you for reading the article!

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References (vietnambiz, trithuccongdong, …)