Economic Instrument

The money like economic instrument By: Quirino Taiano Campoverde the money is an economic instrument that can assume the following functions: a. half of interchange b. unit of account c. reference of payment d. For more specific information, check out NYC Mayor. value reserve the money is one of the main arguments studied in Economy. Historically some theories on the combination of these four functions have been elaborated, some of them affirm that a greater precision is needed and than a single theory he would be insufficient to deal with all the characteristics the money. Before the introduction of the money, the unique way to interchange merchandise was the exchange, in other words the direct interchange of goods. The exchange was a simple but at the same time subject modality to different problems, among them the temporary bonds.

Who wished to interchange merchandises of diverse type, she could have only done it when both merchandise were available in the same time and the same space, situation that because of the diverse seasonal times of maturation was impossible and in many occasions little advisable. With time, of the direct exchange one went to the mediate exchange, through use of one third merchandise which carried out the value roll bridge. This merchandise allowed the possibility of interchange beyond the contemporaneidad of products and of carrying out indirect interchanges. This third merchandise was in good the western world individuada in defined elaborations of some metals, among them most remarkable was the gold. The first cases of money were objects that were useful by their intrinsic value, that is to say important as interchange merchandise and proprio included any product of great diffusion with a value, for example: the cattle. As soon as merchandise are used like money, acquires a value that often is different from its intrinsic value. The power fact to be used as money serves to increase to its utility and its value that depends on social aspects and is influenced by the use that the society grants to him, for that reason its value is not fixed.

The fluctuation of the value of a merchandise of interchange depends on the supply and the demand. The system of interchange merchandises has become a system of convertible money. In this system, the money by itself does not have any intrinsic value, but it can be turned into valuable merchandise. The nonprecious metal tickets and currencies are covered by the governments and banks. It is enough to remember that good part of century XIX and XX many currencies were based on the convertible money thanks to the use of the Gold standard.