Functions of money, commodity money and token money,functions of a central bank

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1. What are 4 functions of money?

 Medium of exchange (trung gian trao đổi: A medium of exchange is anything that is widely accepted in payment for goods and services and in settlement of debts Money is the most common medium of exchange.As

a medium of exchange is used to make payment for goods and services or make settlement for debts

 Store of value: (dự trữ và cất trữ giá trị hàng hóa: money is used to make purchases in the future Inflation is unavoidable so money is not a good store of values Better store of value can be gold, long- term investment…

 Measure of value (đo giá trị hàng hóa: The unit of account is the unit in which prices are quoted and accounts are kept.As a measure of value: money is used to quote prices of goods and services and presents/reflects their value

 Standard of deferred payment: (phương tiện thanh toán sau: money is used to pay for debits in the future: ex: installment buying

2. What are differences between commodity money and token money?

Commodity money –tiền hàng Token money- tiền quy ước

- All country

- Value in use as money as

much as value of material

- Ex: gold, silver

-only every country

- value in use as money is much higher than value of material

- ex: paper note, coin

• Commodity money is used for all country in the world The value in use

as money as much as value of material The principal material used for this types of money has been gold, silver and copper

• Token money: is used for only one country The value in use as money is much higher than value of material The principal material used for this types of money has been paper note, coin

3 What are some functions of a central bank?

+ Serving as the government’s banker

+ Making loans to other bank (they act as the banker of the banking system + Regulating the monetary system for both domestic and international

policy goals

+ Issuing the nation’s currency: Printing money and pumping into the circulation