money management
Chapter 1: Introduction
Background of the study
Money, Its History and How It Evolved
Ever since trading began, money existed, thus, it can be said that money and trading co-exists. The earliest form of money is actually very different from what we are using nowadays in this modern world. The history of money begins around 2500 years ago. Money is any clearly identifiable object of value that is generally accepted as payment for goods and services and repayment of debts within a market or which is legal tender within a country.
Barter
Barter is a system of exchange in which goods or services are directly exchanged for other goods and services. No money is needed in barter system as it does not involve the process of buying and selling. Although there is no evidence pointing towards a society or economy relies solely on barter system, it is believed that barter basically dominated the pre-historical world and at that time, people would just exchange things according to necessity. Thus, barter system can be said to be a primitive form of money as it contributes towards the birth of money.
There are several complications of barter system :
Absence of common measure of value: In a monetary economy, money plays the role of a measure of value of all goods, so their values can be measured against each other; this role may be absent in a barter economy.
Indivisibility of certain goods: If a person wants to buy a certain amount of another's goods, but only has for payment one indivisible unit of another good which is worth more than what the person wants to obtain, a barter transaction cannot occur.
Lack of standards for deferred payments: This is related to the absence of a common measure of value, although if the debt is denominated in units of the good that will eventually be used in payment, it is not a problem.
Difficulty in storing wealth: If a society relies exclusively on perishable goods, storing wealth for the future may be impractical. However, some
Background of the study
Money, Its History and How It Evolved
Ever since trading began, money existed, thus, it can be said that money and trading co-exists. The earliest form of money is actually very different from what we are using nowadays in this modern world. The history of money begins around 2500 years ago. Money is any clearly identifiable object of value that is generally accepted as payment for goods and services and repayment of debts within a market or which is legal tender within a country.
Barter
Barter is a system of exchange in which goods or services are directly exchanged for other goods and services. No money is needed in barter system as it does not involve the process of buying and selling. Although there is no evidence pointing towards a society or economy relies solely on barter system, it is believed that barter basically dominated the pre-historical world and at that time, people would just exchange things according to necessity. Thus, barter system can be said to be a primitive form of money as it contributes towards the birth of money.
There are several complications of barter system :
Absence of common measure of value: In a monetary economy, money plays the role of a measure of value of all goods, so their values can be measured against each other; this role may be absent in a barter economy.
Indivisibility of certain goods: If a person wants to buy a certain amount of another's goods, but only has for payment one indivisible unit of another good which is worth more than what the person wants to obtain, a barter transaction cannot occur.
Lack of standards for deferred payments: This is related to the absence of a common measure of value, although if the debt is denominated in units of the good that will eventually be used in payment, it is not a problem.
Difficulty in storing wealth: If a society relies exclusively on perishable goods, storing wealth for the future may be impractical. However, some