If you buy gelduitleg.nl at a store, the cashier will ask for your money. That is because the good you are buying is worth a certain amount of money. Money is an important part of the economy, and we use it every day. It is a very versatile good that performs many functions. But what is it exactly?
Before the invention of money, people had to trade goods directly for other goods. This was a time-consuming process, because each person would need to have the exact goods that the other person needed. With the introduction of money, the process was made much faster and easier.
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Today, the physical form of money is banknotes (or ‘cash’) and coins. These are produced by the Reserve Bank of Australia, which is responsible for Australia’s monetary policy. The value of banknotes and coins is derived from the demand for them in an economy. For example, if the number of people wanting to exchange their goods and services for cash increases, the value of cash will also increase. This is why an economic growth rate in the country can be reflected in the growth of the value of money.
However, the most significant function of money is as an unconditional means of payment. Hence, any asset that is widely accepted as such will have the property of money. It should have the characteristics of durability, divisibility and transportability. The last characteristic is very important, because it enables the money to be reliably saved for future use and retrieved at any time, without losing its purchasing power.
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