What is money??

Question

In olden days we used to barter say wheat for rice. Now how can a piece of paper money decide the value of rice. How come people are ready to kill for a piece of paper money. And how did it enter the system really?

On what basis currency is made?

Answer 1

any thing of value, unlike the US dollar

Answer 2

Define economics as study of nature, composition, laws, properties and classification of wealth. Start studying wealth the way chemist studies matter. Wealth can be broadly classified into two classes: A) Wants comprising of goods and services and B) Means comprising of money and money related forms of wealth. All forms of wealth that are measured or expressed in units of money are means (example: rent, interest, dividend, wages etc). Money may be made out of a piece of paper or money may be a metal piece.

Answer 3

It's a note of legal tender backed by a nation's central banking authority.  It started out as valuable items like precious gem stones and metal.  Turned into a gold and silver based system  along time ago.  Which evolved into bank notes backed by gold.  Which in time no longer needed gold backing as a store of value just supply and demand.  The money had become a precious commodity in it's own right.  During the great depression germans used to burn their money because it was cheaper than fire wood.  People would spend all their money as soon as they got it for fear of it losing value by the end of the day.  Just like a loaf of bread costs 1 million dollars in zimbabwae today.

Answer 4

Money is designed to represent the relative value of something. That value is set by supply and demand, and is basically what the purchaser is willing to pay for it. The value of actual currency is set by smart economic people. The way currencies interact internationally is determined by how much certain countries owe each other due to both permenant and temporary trade deficits.

Answer 5

here watch this

may help you out

http://video.google.com/videosearch?q=pa...

cheers