TECHNOLOGICAL INSTITUTE OF THE PHILIPPINES

MANILA

GEC 004B - Mathematics in the

Modern World
ACTCY11S2

Group Work #1
Chapter 1: Basic Concepts of Money

Precious #1

Gerardo Abadilla, CHE, MBA Participants:

Industry Lecturer

ABELLA, JONAH MAE

ADANO, RUBYLYN

DATE: October 14,2021 ANCHETA, ANGELINE JOY

ANGELO, JULIANA MARIE

BANDERADA, JOSHUA

BEQUILLO, LEVIS
 Honor Pledge

“I accept responsibility for my role in ensuring

the integrity of the work submitted by the group
in which I participated.”
Answers:
Exercise 1-1

1. To say money is socially defined means that something that fulfill the purpose of money is
also considered to be money.

2. Functions of money?
Money has a lot of functions but the main three are a medium of exchange, a unit of
account, and a store of value.

3. Meaning of money as a unit of account.

Money as unit of account is the numerical measurement of market value of products,
services, and other transactions. It is the thing used to value goods and services, make
payments, and record debts, making it easy to calculate. Money is considered a unit of
account and is divisible, fungible, and countable.

4. Meaning of money as a store of value.

Meaning of money as a store of value. Money as a store of value is the method of
transferring the usage of money from the present to the future. The money must be reliably
saved, stored, and retrieved and then then, it can be used as a medium of exchange in the
future.

5. Meaning of money as a medium of exchange.

Meaning of money as a medium of exchange. It is when money is used as an exchange of
goods and services. It is a method of payment in the market to purchase products, services, or
other transactions.

6. Price tag is an example of what function of money?

Price tag is an example of Unit of account.

7. Stock market price is an example of what function of money?

- Stock market price is an example unit of account

8. Check as payment exemplifies what function of money?

 - Check as payment exemplifies medium of exchange.

9. When economists say that money serves as a medium of exchange,

they mean that it is a means of payment.

10. When economists say that money serves as a unit of account,

they mean that it is A monetary unit for measuring and comparing the relative values of goods.

11. When economists say that money serves as a store of value,

they mean that it is a financial unit for estimating and contrasting the overall values of the
merchandise.

12. Fiat money is is an official money that isn't supported by a ware like gold. Fiat cash gives
national banks more prominent command over the economy since they can handle how much
cash is printed. Most current paper monetary standards, like the U.S dollar, are fiat monetary
forms.

13. Relationship of the purchasing power of the Peso to the price level?
Essentially, there is an opposite connection between the price level and the purchasing
influence of cash. The higher the price level is the lower the purchasing influence of cash is.

14. The money supply is backed by the government’s capacity to control the inventory of cash
and to accordingly keep its worth generally steady.

15. Checkable deposits are classified as money because they can be promptly utilized in
purchasing goods or services and paying obligations.

16. The value of money relationship with the price level is Inversely proportional

17. The purchasing power of money and the price level vary Inversely

18. If the price index rises from 100 to 120, the purchasing power value
of the Peso will Fall by 20%
19. Other things equal, an excessive increase in the money supply, will
affect the purchasing power of the Peso in what way?
An excessive increase in the money supply, will affect the purchasing power of the peso
In a way that it will lead to a fall in the purchasing power of Peso

20. The transactions' demand for money is most closely related to what function of money?
The transactions' demand for money is most closely related to medium of exchange.

21. The asset demand for money is most closely related to what function of money?
The asset demand for money is also known as "speculative demand." It is defined as a
demand for highly liquid financial assets—domestic money or foreign currency—that is not
dictated by real transactions such as trade or consumer spending. The perception that money is
optimally part of a portfolio of assets held as investments drives asset demand.
The holding of real balances for the purpose of avoiding capital loss from holding bonds
or stocks is referred to as asset demand. The net return on bonds is the sum of interest payments
and capital gains (or losses) from changes in market value. When interest rates rise, aftermarket
bond prices fall, implying a capital loss from bond ownership. As a result, the return on bonds
may be negative. As a result, people may keep money in order to avoid bond losses. Money is
thus regarded as a type of asset for the purpose of storing wealth.
The asset demand for money is inversely related to the market interest rate. This is
because at a lower interest rate, more people expect the interest rate to rise (and thus a fall in
aftermarket bond prices). As a result, more people will store their wealth in cash rather than
bonds. At a lower interest rate, speculative balances will be greater. It is also affected by
investors' aversion to risk, the relative demand for and supply of other financial and real assets,
and changes in economic forecast.

22. The asset demand for money relationship with the rate of interest is Store Value.

Exercise 1-2
True or False

1. Balance of payments could be one of the reasons for the adverse economic
condition? True

2. Money can be in any form, material, or appearance under "medium of exchange

concept/principle."
True
3. Our tie with the U.S. is one that could partially explain our present monetary system including
its effects good or bad. True

4. Political system is one of the key elements that shaped our monetary system. True

5. The lesser the currency exchange rate of the country to the dollar, the less progressive the
country would be. True

Define

6. Money
Money is a liquid asset that can be used for Transactions. It serves as a medium of
exchange in ways that we use the money to trade for the things we need or want. It also serves as
a unit of exchange, by being the basis of comparison that people use to hand out prices and
records of debts. It is like gold and other precious metals, has value because it represents
something valuable to the majority of people.

7. Portability
Portability is defined as the ability of one person to carry or bring that object everywhere.
For example, is money, a portable object that has value. People bring and carry it everywhere
inside their wallets or pockets.

8. Unit of account
A unit of account is anything that may be used to value products and services, manage
debts, and do calculations. Money is a unit of account because it can be counted, and it is the
common foundation of comparison that people use to display prices and record debts.

9. Durability
According to Cambridge English Dictionary; durability is the ability of a person to do
something for a long time without getting tired of being injured, while in Miriam Wester
dictionary, durability is stated as; able to exist for a long time without significant deterioration in
quality or value. Which means that, durability is the time of how long a product or a service may
last.
10. Store of value
A store of value is any commodity or asset that would normally retain purchasing power
into the future and is the function of the asset that can be saved, retrieved and exchanged at a
later time, and be predictably useful when retrieved.
Any asset, currency, or commodity that can be reliably converted to another at a later
date can be used as a store of value. The conditions under which an item qualifies as a store of
value are determined by its ability to be saved, retrieved, and exchanged while retaining its
purchasing power.

11. Medium of exchange

Medium of exchange is an act of payment of goods and services, Intermediary between
the seller and buyer. Medium of exchange now consider as currency.

12. Bartering
Bartering is the direct exchange of goods and services between two or more people
without the use of money.

Enumerate the functions of money

13. Medium of exchange

14. Store of value
15. Unit of account
16. Standard of deferred payment

Enumerate the necessary attributes of money

17. Durability
18. Portability
19. Divisibility
20. Uniformity