Money

There is a fundamental difference between money and other types of assets in the economy: money is something that can be used to purchase goods and services. This means that inflation, the increase in prices, affects the number of goods and services that can be produced or purchased.

Source
This leads to a situation where goods are over-produced or under-produced because it is difficult to know what the prices will be for these items. This also leads to periods of scarcity where there are not enough goods for everyone, which ultimately leads to higher prices as people scramble to get what they need.

Marx's critique of capitalism sees this situation as being an inevitable consequence of the accumulation process -- all commodities are tied more closely together for capital accumulation, which Marx sees as the driving force behind capitalism's development.

Despite this critique, many economists believe that there would not be such a problem if governments were able to make sure there were enough goods available at any given time without causing inflation.

Different types of assets have an impact on the economy. These assets can either be physical or financial. A few of them include properties, lands, Gold, etc. Money is a good example of a financial asset that other assets in the economy has more value than because it is the most liquid asset and it has a limited number of uses.

Assets are things that individuals own and they can be stored by having them leased to another party with the promise of future revenue or income.

In economics, assets usually refer to tangible goods such as land, houses, or factories. People consider their properties as long-term investments with high returns on investment. Money is not considered an asset by most economists because it does not provide any kind of return. Since the fiat money is only used as a medium of exchange, unlike other commodity money that is used as a store of value as well as mediums of exchange.

In finance, assets are financial resources. Usually, assets include cash and other liquid investments that can be converted into cash quickly and easily. Assets may be "fixed" or "current". Fixed assets are long-term investments with a single life span such as machinery or buildings. Current assets are short-term investments like liquid cash on hand which can be turned in quickly for current income.

Money is the most commonly used form of currency and it is always in circulation. Currency serves as a means of payment and a store of value.

With the invention of central banks, money became a commodity. The cost of money is determined by its supply and demand in the market place and it fluctuates with inflation, deflation, or changes in interest rates.

The price level is not easy to determine but economists generally agree that it is represented by the sum of goods and services produced in an economy over time. Money makes it easier for people to trade goods because one good can be exchanged for another, without any real physical change occurring.

Posted Using LeoFinance ^Beta