About Money

A. The Money
Before discussing the function of money we will not discuss money according to the experts.
R.J. Thomas said that "money is something that is readily and generally accepted by public in payment for goods, services, and other valuable assets and for the payment for debts." This means that money is an object with a simple and accepted by the general public for the payment of the purchase of goods, services, and other goods beharga, and for the payment of debts.
Holmen Sir Dennis Robertson said the money is something that can be received for the goods.
From the definition of experts is presented, it can be concluded that the money could have received general characteristics, can be used as a means of exchange, and can be used as a means of payment.

B. Function Money
Money has some function, the function of money can be classified in the original function and derivative function. Money is the original function as a means of exchange and of debt instruments. Derivative functions include a standard or ukuranpembayaran suspended, tool storage property, and the tool changer wealth.
1. Tool Swap
Function of money as a means of exchange, for example, farmers need a hoe. Panennya he can sell to get money, money the sale used to buy the harvest hoe. So, money functions as a means of exchange.
2. Tools of the computation (the value)
As the countdown of the money is used to calculate the price of an item. Value of goods can be measured with uang.misalnya, price Rp.6.000 pen, 00 books and write Rp.2.000, 00. This value indicates that the pen three times book value write.
3. Standard Size or payments are delayed (standard of deferred payment)
In this function, the money is used to represent debts. Purchasing power of money was made public that can be expressed with the units and that according to the guidelines and measures. For example, is to be more reasonable if we borrow money Rp.5.000.000, 00 for 10 years of owning 2 cows.
4. Tool storage property
Humans usually do not consume all the income, earnings that are not usually consumed stored at home, the bank for the future. In other words people save money for future needs or anticipate pengualaran the unexpected.
5. Tool changer value / property
Money changer to work for the value. For example, Mrs. linda by PT XYZ promoted to positions occupied in the branch Makassar.sebelumnya, the mother has a house linda dijakarta. Mother linda eager to move the house. He found the way out to sell her house and buy a house dijakarta in Makassar. He may not physically move the house from Jakarta to Makassar. so, the money changer to function as a value.
C. Type of money
Money can be distinguished on the basis of the issue, the money, the State issued, the value of money beriku this one at a briefing.
1. Based on the type of money that issue.
Based on the parties to pay the money be divided into giral and kartal, kartal money is paper money and metal dimasyarakat outstanding, the money is spent and managed and expenditure is a valid means of payment.
Giral money is a means of payment such as checks Bilyet gyro, and the like. Giral money issued by a bank used as a means of payment.
2. Money based on the type of money.
Based on the material the money divided up coins and paper. Adalahuang coins made of metal such as gold, silver or other metal that serves as a means of payment. Money is paper money made of paper and its use is governed by the laws and customs. Money circulating as a means of payment.
3. Based on the type of money that the State remove it.
Based on the State to pay the money divided up in the nation (domestic / national) and the money in the nation.
Money in the nation is money issued by the State concerned, such as that issued by the rupiah indonesia.
Foreign money is money that is circulating in a State but was issued by the State for example, in indonesia, such as circulating money dollars (United States), yen (Japan) and others. Foreign currency is also called foreign exchange.
4. Type of money based on value for money.
Based on the comparison of the value of the money be on the full value of money (full bodied money) and not worth the money in full.
Full cash value (full bodied money) is money that the value of the same material with a nominal value of money or value of the gold standard,. In the gold standard of money on the value of money, if money gold gold itumengandung eg 5 grams, then the value for money in exchange for the 5 grams of gold.
Money is not worth full value of money is smaller than the material value nominalnya. Generally, the money does not bernominal is full of paper money. Money that you hold the Rp.10.000, 00 may be material value only Rp.200, 00.
Terms - terms of money
To have an object can be used as a means of trade and money must meet the requirements as follows.
a. And can be received in general. (Acceptability)
b. Durable and not easily broken (durability)
c. Value is fixed in a long period of time (stability of value).
d. Easily stored and moved / brought to go - without any difficulty (portability)
e. Easily be divided without reducing the value (uniformity)
f. The amount is limited and not easily be falsified (scarcity)

D. Theory of money
There are several theories about the money. Theories can be divided into two major groups, namely, the theory of value for money and the theory of value change in the value of money.






1. Theoretical value of money
a. Goods theory
According to the theory of good money, money made from the goods. Therefore, the purchasing power of money depends on demand and supply, marginal utility, and the cost of making money.
b. Minimalist theory
According to the theory niminalis value of money is written on the money that is not of material value, but Leh is determined that there is value in money.
2. Changes in the value theory of money
In economic activities, the value of money can be changed. If the price down means that the value of money when prices rise and increase the value of the money down. Changes in the value of the money this is highlighted by the theory that changes the value of money.
a. Quantity theory
Dipelopori quantity theory by David Ricardo. According to this theory, the outstanding amount of money affected the price value. That is, change the amount of money circulating affect prices. If the amount of money circulating the low prices come down, if the money circulating mka high price increases. In other words, the price level is always proportionate straight. If the comparison is depicted in the form of equality, mka akan as seen below.
Where:
M = M = money KP
K = constant
P = price
The weakness of the quantity theory because this theory considers money as a means of exchange. Quantity theory assumes that each increase or reduction in value of the money circulating in touch directly with the price level. in relation to this amount of money and prices is considered linear and proporsional.teori does not recognize this as the money is not only trade goods but also can invest in or ditabung.
b. Theory of transaction
Irving Fisher completed by entering the quantity theory unsure speed circulating money with the following formula.
MV = PT
Where:
M = jumlh money circulating
V = speed of rotation of money
T = amount of goods and services
P = general price level
Then Irving Fisher formula was developed by dividing the money. Mejadi money giral and kartal. Kartal money and given the symbol M giral money given simol M1. and speed of money circulation in kartal symbol V and give the money giral bersimbol V1. Therefore, the MV = PT formula changed to MV = PT + M1V1 so P = (M1 + MV 1 V) divided T. Irvingfisher say that P merupaka factor that if changed pasif.dimana P M, V, and T change.
c. Theory of income.
Theory of income raised by Maynard Keynes, who said that the motive for holding money adalha below.
1. Transactions motive
The transaction is intended primarily to meet the needs of a day - day. transaction affected by many levels of income, the greater the income the greater the likelihood someone to make.

2. Motif guard
This motif is based motif is based on the existence of the pastian circumstances, for example, today, we're healthy we may be sick tomorrow, therefore, guard house - try to keep some income and prepare for the unexpected before the incident. Dana guard is also influenced by income.

3. Speculation motive
Income to provide a high chance on someone unuk transaction that is speculative. This is done to benefit a lot with a high risk. For example, when buying a stock price will go down and sell when prices rise. But if prices continue to go down the speculative business will be losers. Previous goals or motives affect the value of money. By entering income dala elements of price formation, then john Maynard Keynes put the formula:

MVy = PyTy or
Where:
M = amount of money
Vỹ speed of money circulation revenue.
Ty = goods and services end
Py = price level.

d. Theory preparation of cash
Theory preparation of cash raised by Alfred Marshal. Marshal said that the value of money depends on the amount of income people are arrested or held in cash. The amount of income that are stored as a stock depends on the amount of cash income and the interest rate on the market. Systematically the value of the money can be formulated.

M = K.P.Y
Where
M = amount of money circulating
K = amount of money to supply cash
P = price level
Y = income
If someone higher income, the cash stored longer. Conversely, if low-income cash in the store more quickly.

e. Demand and supply of money
1. Request money
Money demand is a term used by economists to menerang right individual or company holding the money (why not maintain other assets). There is a two-base for that. The first transaction demand shows that people who need money. Both are assets that indicates demand the desire to own property (asset) which is very smooth and free of risk. In other words, money demand is the number of monetary units (in the form of money kartal or giral) to property held as cash.
Money demand is influenced by three things. Third, in principle, this is in line with the theory presented by JMKeynes yan.
a. Requirements deal
Associated with the function of money as a means of exchange, we use the money to buy goods and services or to pay bills. If revenues increase, the value of the goods we buy then we ride aka need more money for the deal.
b. Needs guard
This need is influenced by the cost of saving money, which is determined by the interest rate. In this case money is the value of property as a storage. Here we must remember the concept of opportunity cost.
c. Conjecture needs
Speculation means to act on the basis of the forecast change in the value of property in the future. If a speculator predict that house prices, stock value, increasing their gold akan akan not buy it save money. So in this case the speculator expects profits from house price increases, the value of shares and gold in the future. This will reduce the demand of money. This applies vice versa here does not dare to speculate that they will choose save money, which is the most secure asset in saving money.
2. Preferred currency
Offers of money is the amount of money available in an economy. Offers in the form of money is set monetary policy. Therefore, the preferred currency is set by the government through bank indonesia.
a. Factors - factors that affect the money quote
Factors - factors that affect the bidding money include:
1) High interest rates low,
2) Level of income is low,
3) Number of inhabitants,
4) The structure of economic society,
5) Iptek population control,
6) The state of geography
7) economic globalization.
b. Bank Indonesia policies relating to the preferred currency.
Bank Indonesia has the authority to change the amount of money circulating. With how to change the amount of banking reserves in the system through the sale and purchase of government bonds dipasar capital. Action with the bank indonesia sell or buy bonds caused a change in bank reserves as follows:
1) At the time the bank indonesia buy government bonds, money paid didepositokan in the banks, so that the amount of reserves in the bank about increasing.
2) At the time of selling government bonds, money received from the banks, so that the amount of reserves in the bank will be reduced.
There is a backup dibank changes arising from the sale or purchase of bonds, the ability to influence the bank in providing and creating money.
Factor-factor that influence the decision in the bank indonesia currency, namely:
1) The interest rate, which affects the amount of money circulating in the economy.
2) Level of inflation.
3) Level of production and national income.
4) the health condition of the world banking.
5) exchange rate of rupiah.