LECTURE # 2

MONEY
It is something generally accepted as a medium of exchange, a measure
of value, or a means of payment

Barter Comodity Paper Electronic Virtual

system money money money money
FINANCIAL SYSTEM
 A financial system is a set of institutions, such as banks, insurance
companies, and stock exchanges, that permit the exchange of funds.
 It transfers risk
 Financial products

SIX PARTS OF FINANCIAL SYSTEM

 Money
 Financial Instruments
 Financial markets
 Financial institutions
 Regulatory authority
 Central banks
FIVE PRINCIPLES
 Time has value
 Risk requires compensation
 Information is the basis of decision
 Market determine prices and allocate resources
 Stability improves welfare.