2006-11-16 08:29:33 · 6 answers · asked by Melli 6 in Social Science ➔ Economics
I'm interpreting your question differently than the others; it seems you're asking what valuable function does *money* serve in an economy?
The answer to that is, any economy that is evolved beyond the most rudimentary caveman economy really needs something that can capture the value a person creates for others, so that he can store that value and then exchange it to others for things he needs. With its invention, money served as this store of value and medium of exchange.
Having such a thing is very beneficial because it allows an economy to become far more productive, efficient, and sophisticated -- and better at allowing people to organize themselves and their resources to serve their human needs.
2006-11-16 15:31:27 · answer #1 · answered by KevinStud99 6 · 2⤊ 0⤋
Money's value is derived solely from the people's belief in it and willingness to accept it in exchange for goods and services. That value is effected by the belief in the strength of the economy and stability of the government issuing the money.
Otherwise money is just bits of paper and disks of cheap metal.
I tried an experiment once and bought some real silver dollars back when they were about $8 per silver dollar. I tried to buy things with those silver dollars at the going rate of $8. Nobody would take them. Even though they were 1 oz of real silver. In this case, they were worthless because those people wouldn't take them.
Money is money and has value only when we all believe it does.
2006-11-16 18:34:03 · answer #2 · answered by Uncle Pennybags 7 · 0⤊ 0⤋
In america? the value of the cotton paper and ink. It used to be tied to a certain ammount of gold, but when the price of gold dropped they decided to not do that. Now I guess the "Hip New" thing is to have Euros. I like them, more stable and universally accepted.
2006-11-16 16:40:36 · answer #3 · answered by skweekey01 2 · 0⤊ 0⤋
If you are refering to notes and coins, they have no value, its just a piece of paper and a bit of copper.
What we have decided they represent is worth a bit. We have decided as a society that a piece of paper with 20 written on it is worth 20 dollars, and decided what goods are worth 20dollars.
It is based on gold, and people stored gold in banks, they got a note saying how much gold they had in what bank. People just began to trade the notes of gold for goods.
2006-11-16 17:16:01 · answer #4 · answered by holdon 4 · 0⤊ 0⤋
Value of the money is relative to power how much it can buy.
2006-11-16 17:29:20 · answer #5 · answered by sanJose_Guy 4 · 0⤊ 0⤋
not as much as it used to be
2006-11-16 16:36:50 · answer #6 · answered by adrianne 2 · 0⤊ 0⤋