Money

Economy doesn't only interested in with money,but money make each person an Economist. Instead of giving someone something for free,the moment we want money from it,you will have seen her/his invisible face.

          Behavioral economist Dan Ariely to prove it made an experiment.Dan offered to students one-cent Starbucks candy.The students took four candies average.After that Dan discreased the prices to zero.In traditional Economy, there is a thought that the demand will increase because the price is low(please check),but in this experiment it is not.Almost no student can get more than one candy.

          The world revolves around money. Money,in an Economy is a basic elements. If there was no money we had to make a trade.So we exchanged goods and services.Money,making easy the exchange before getting complex.

          In countries which nations lost their money faith(maybe because of hyper-inflation),in like this countries generally useful economic system is exchange(bartering/barter).At the end of the 1980's,while the Soviet Union broke down,people started using cigarettes as a currency.But the exchange economy systems are quite inefficient.

          The money,using for exchange as well as it has two different task too.Firstly,it is an account unit.So,a value is a criterion that helps us to assess.Secondly,it is a value depot.So,do not lose value in time.But today these are the topic of discussion.

          Money Types-It is possible to distinguish two categories of money:

Commodity Money Although it is not really a form of money,there is a real value.Maybe more obvious example is gold.Any other Commodity moneys,alcohol,cigarettes,drags...

Fiat Money This,hasn't gotten any value.In modern and devoloped countries this system is useful.Treasury Ministry of USA and the Central Bank,they print US dollar banknotes.In fact paper money,can exchange with commodity money.Technically,citizens could demand a certain amount of gold against dollar banknotes.But since 15 Aug. 1971, with The USA President Nixon's decision put an end to this change and thus the dollar has become completely legal money.Stability of legal money,with the people's faith to countries legal system,based on the government's economic credibility.

             To measuring money, One of the important way of an economy's health identify,in the related economy to calculate the flow of money.While people's money increased,they feel that they rich and they spend a lot.For the respond to increasing demand in businesses, they demand more raw materials and they increase the production.This,increase share prices and economy growth.

               The Central Banks count money in different ways.The most popular is -The USA Central Bank- M1 is the name given.The M1 Method,beside banks with the money in circulation,it measures the amount of money people have in their checking bank accounts.In other words,M1 determines the amount of money that people have access to.There is wider money counting sytems too: M2, like deposit accounts,less accessible,so less liquid assets; M3,Such as long-term savings and money market funding measures financial instruments that replace money.For why,the British Central Bank gave the name M4 instead of M3.

              At the head of Millenium,in circulation there was $ 580 billion;$ 599 billion was in bank accounts where people could immediately withdraw.If you divide this amount into the adult American Population(220 million) you get a figure almost of $ 2,850.This,it's more than the money in the pocket of most people.The reason why this figure is so high is due to the fact that most of the money is in overseas countries.

             Money doesn't only a barter tool.It is too much than in circulation money stock and money in bank accounts.It's a kind structure of thought.The banknotes in our pockets and coins value,above them is more than the writing.Between banks money transfers,real value is more little.Because of this money should support with confidence.Both we need to believe that it is the money of the person who pays and that the government will prevent the money from losing value.

Liquidity

               Liquidity,an entity's-for example ''a house''- to money or it is a kind of measure how easily you can turn to other values that can be used as money.For example, the big company's share certificates are quite liquid; it is easy sellable because it can easy find receiver.The houses aren't quite liquid beacuse they can't find receiver easily.Businesses,with the Liquidation Sales,they try to exchange their goods to cash.