What are the 4 types of money? Check Answer at BYJU’S (2024)

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What are the 4 types of money? Check Answer at BYJU’S? ›

The 4 different types of money as classified by the economists are commercial money, fiduciary money, fiat money, commodity money. Money whose value comes from a commodity of which it is made is known as commodity money.

The Four Basic Functions of Money

Money serves four basic functions: it is a unit of account, it's a store of value, it is a medium of exchange and finally, it is a standard of deferred payment.

M0 = Currency notes + coins + bank reserves. M1 = M0 + demand deposits. M2 = M1 + marketable securities + other less liquid bank deposits. M3 = M2 + money market funds. M4 = M3 + least liquid assets.

money, a commodity accepted by general consent as a medium of economic exchange. It is the medium in which prices and values are expressed; as currency, it circulates anonymously from person to person and country to country, thus facilitating trade, and it is the principal measure of wealth.

Economists differentiate among three different types of money: commodity money, fiat money, and bank money. Commodity money is a good whose value serves as the value of money. Gold coins are an example of commodity money. In most countries, commodity money has been replaced with fiat money.

There are four categories of money. They are fiat money, commodity money, fiduciary money, and commercial bank money. Depending on a nation's economic and political system, the society uses the types of money that best suit their transactions.

In general, there are four main characteristics that money should fulfill: durability, divisibility, transportability, and inability to counterfeit.

Money – in its various forms – fulfils various key functions including a medium of exchange, a unit of account, a store of value and a standard of deferred payment.

To summarize, money has taken many forms through the ages, but money consistently has three functions: store of value, unit of account, and medium of exchange.

What Is M4 Money? M4 money is a classification of money in the United Kingdom that includes money that is circulated amongst the public, non-financial institutions, private sector retail and wholesale banks, and building society deposits.

Is M4 the most liquid money? ›

M1 and M2 are known as narrow money while M3 and M4 are known as broad money. These measures are in decreasing order of liquidity. M1 is most liquid and easiest for transactions whereas M4 is least liquid of all. M3 is the most commonly used measure of money supply.

Cash is the most liquid asset, followed by cash equivalents, which are things like money market accounts, certificates of deposit (CDs), or time deposits. Marketable securities, such as stocks and bonds listed on exchanges, are often very liquid and can be sold quickly via a broker.

Money, in simple terms, is a medium of exchange. It is instrumental in the exchange of goods and/or services. Further, money is the most liquid assets among all our assets. It also has general acceptability as a means of payment along with its liquid nature.

Anything which is accepted as a medium of exchange is called money. Money can be any commodity or item if it is regarded as money by everybody.

Anything which is accepted as a medium of exchange and simultaneously acts as a measure, store of value and standard of deferred payment is termed as 'money'.

Primary function: It is a unit of value which is a medium of exchange. 2. Secondary functions: It is used to make future payments, store of value and transfer of values. 3. Contingent Functions: It is a liquidity which distributes our national income and gives maximum satisfaction to consumers and producers.

The four functions are medium of exchange, unit of account, store of value, and standard of deferred payment. In the long run, something will not serve as money if it does not fulfill all four functions.

In order for money to function well as a medium of exchange, store of value, or unit of account, it must possess six characteristics: divisi- ble, portable, acceptable, scarce, durable, and stable in value.

Primary function means a major activity for which a building or facility is intended. ...