Money and Its Functions in Modern Economy

8915 Words Apr 29th, 2011 36 Pages
The Finance University under the Government of the Russian Federation

International Finance Faculty

Term Paper
Money and its functions in modern economy

Klyagin M.I.
Group IFF 2-2

Tutor: Olga V. Kadysheva/ Svetlana E. Tsvirko

Moscow 2010

Table of contents


CHAPTER 1. Nature of money in today’s economy 5 1.1. The concept and types of money 5 1.2. Functions of money 7
CHAPTER 2. The role of money in the modern market economy. 17 2.1 The role of money in the production process. 17 2.2. Differences in characteristics of the role of money. 22
Conclusion. 25
The list of references. 26


Money is one of the greatest inventions of a human thought. Perhaps, the whole structure of today’s economy is
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For a long period a measure of value of ancient people was expressed through the products of their occupations (hunting or gathering).) 2. Silver monometallism - the era of money made of silver. 3. Bimetallism – it became possible to pay for goods not only for silver but also for gold; 4. Gold monometalism – gold gradually replaced old forms of money and the era of the gold standard started. The demand for gold was totally due to its properties, as it was rather convenient to manufacture coins of such a rare and beautiful metal.
Paper money appeared as a consequence of the inconvenience of gold coins in use (they were quickly losing their appearance and weighted a lot). Therefore the Gold standard finally collapsed in the first half of the XX century.
In the period of the First World War banks started to refuse to change paper money into gold and this situation got even more intense in the times of the Great Depression of 1929-1933. At the end of the World War II a dollar standard had been set at a conference in USA, and in 1973 in Jamaica a system of floating currencies was adopted. Today’s money is easy in use and being constantly modified, often changes its forms.

In this regard, we can speak of different forms of money: 1. Cash – money which is represented in metal coins or printed paper money;