Money is used as a means to make a payment, store of value (savings), and place value on goods and services most economist believe money contributes to economic growth and development by make it easier for people to complete their transactions. Barter is the exchange of goods and or services without the use of money. However, "if money did not exist we would invent it" as stated by some economists. What is the function of money? Discuss how money contributes to economic growth and\or development? If there is no money will society find a way to exchange goods and services without it? Explain.
IS-LM-PC Analysis
The IS (Investment Saving), LM (Liquidity Preference- Money Supply), and PC (Philips Curve) is the model that looks at the dynamics of output and inflation. It takes into account the central bank policy decision to adjust the inflation and real interest rate in the economy. It enables the economist to weather to priorities between employment and inflation rate analyzing the model. It is a practice-driven approach adopted by economists worldwide.
IS-LM Analysis
The term IS stands for Investment, Savings, and LM stands for Liquidity Preference, Money Supply. Therefore, the term IS-LM model is known as Investment Savings – Liquidity preference money Supply. This model was introduced by a Keynesian macroeconomic theory which shows the relationship between the economic goods market and loanable funds market or money market. In other words, it shows how the market for real goods interacts with the financial markets to strike a balance between the interest rate and total output in the macroeconomy. This particular model is designed in the form of a graphical representation of the Keynesian economic theory principle. The output and money are the two important factors in an economy.
Money is used as a means to make a payment, store of value (savings), and place value on goods and services most economist believe money contributes to economic growth and development by make it easier for people to complete their transactions. Barter is the exchange of goods and or services without the use of money. However, "if money did not exist we would invent it" as stated by some economists.
What is the function of money?
Discuss how money contributes to economic growth and\or development?
If there is no money will society find a way to exchange goods and services without it? Explain.
a)
Money is defined as a medium of exchange, which performs the functions as follows:
- Medium of exchange
- Store of value
- Unit of account.
Money is used as a Medium of exchange for the transaction of goods and services between the buyer and the seller. It acts as a store of value as it can be stored, saved & used for the future transactions. When retrieved, it can be used for the exchange purpose. Along with that, it is considered as a standard unit of measurement through which the value of goods & services can be measured in the market.
It also serves as a mode of deferred payment through which payment can be made on some future date.
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