Definition of Different Kinds of Money

Definition of Different Kinds of Money

There are different kinds of money in this world. In different countries, money has different names.

1.Narrow Money

2.Broad Money
3.Black Money
4.Legal Money
5.Optional Money
6.Standard Money
7.Token Money
8.Fiat-money
9.High Power Money
10.Bank Money
11.Actual Money
12.Near Money

13.Money Of Account

1.Narrow Money

1. What is the narrow money?

2. What is the definition of narrow money?

Narrow money is a kind of money which has high liquidity generally in public hand without a bank. So narrow money means the amount of cash in public hand and the sum of demand draft of a bank. Narrow money is more helpful in the medium of exchange. That's why narrow money is very useful in market activities.
So Narrow Money Equation: M1=C+DD
Where,
M1 means narrow money
C means cash in public hand.
DD means a demand draft in a commercial bank.

 

2.Broad Money

1. What is the definition of broad money?

Broad money is the sum of narrow money and term deposit (Fixed deposit) in a fixed time. Here broad money is less liquidity than narrow money. Because of using a term deposit needs a high time than narrow money. That's why it can't be possible as a medium of exchange in the time urgent need. Various economic specialists have said that broad money is involved in national income(NI).In fiscal policy and implementation of the plan, the broad money concept is widely used.

So Broad Money Equation: M2=C+DD+TD or, M2=M1+TD

Where,

M1 means narrow money

C means cash in public hand.

DD means a demand draft in a commercial bank.

TD means Term Deposit(Fixed Deposite) in a bank.

3. Black Money

1. What is Black Money?

2. What is the definition of black money?

Generally, black money means that kind of money is not included in national income in a fiscal year. The money which is not shown to avoid tax in a fiscal year is called black money. Many organizations and persons are not interested to show some money in the income statement ignore the income tax. So the required return is concealed for tax evasion by any organization. Finally, black money, corrupted money, is stated that the money is concealed for tax evasion by the organization or person in a fiscal year is called black money.

4.Legal Money

1. What is legal money?

Legal Money which is issued and control by the government law and regulation of a c nation and the general public has to be accepted as a medium of exchange by the law is called legal money. Example, USD($) in the USA, Pound(£) in the UK. Generally, the central bank executes the money of a nation.

5.Optional Money

The mone which is helpful for the transaction but not committed to accepting according to the rules of government monetary policy is called optional money. Such as check, prize bond, and so on. This money is not obligatory for the medium of exchange.

6.Standard Money

The money which has the same value of its visible price and intrinsic value is called standard money. In the transaction, we use this type of money regularly.

7.Token Money

The money which is visible or metal's value higher than the intrinsic value is called the token money. Often, we use this type of money.

8.Fiat-money

Fiat-money which is controlled by the law of a nation but have no physical value is very useful in demand and supply transaction.

9.High Power Money

1. What is high power money?

High power money is a broad concept in the economy. High power money can be defined as the sum of issued paper currency and metallic currency by the central bank-reserve of money by the central bank and others reserve in the central bank. Its called super money.

So, High power money B=C+R

Where, 

B=High power currency

C=Issued by the central bank(paper and metallic currency)

R=Strong reserve in the central bank.

10.Bank Money

Sometimes bank issues some notes being used as the medium of exchange is called the bank money. Such as check, bank draft, etc.

11.Actual Money

The money which is used as a financial transaction in day to day life is called actual money. There are two kinds of actual money.

(a)Metallic Money

(b)Paper Money

12.Near Money

The assets which are not used as a medium of exchange but these can be turned into money in need is called the near money.such as treasury bill, savings, govt bond, etc.

13.Money of Account

1. What is the money of the account?

2. What do you understand by the money of the account?

The name of money of a nation is called and calculated by designation is named money of account such as Dollar of USA, Pound of UK.

The definition of Different Kinds of Money is very urgent to know before appearing on the interview board.