Meaning and definitions
Money may be anything chosen by common consent as a medium of exchange for goods and services, repayment of debts, and as a measure of value. There is no unique definition of money as it is very difficult to give a very precise definition of money. That is why money as a concept has been defined in different ways by various economists. Some economists have defined money on the basis of its functions while others have defined it on the basis of its general acceptability. Some important definitions are given below.
1] According to Prof F. A. Walker, [1840 – 1897], “Money is what money does”.
2] According to Prof D H Robertson, “Money is anything which is widely accepted in payment for goods or in discharge of other kinds of business obligations”.
3] According to Prof Crowther, “Money can be defined as anything that is generally acceptable as a medium of exchange and that at some time acts as a measure or a store of value”.
4] According to Lord J M Keynes, “Money is that commodity by delivery of which, debt contracts and price contacts are discharged and in the shape of which a store of general purchasing power is held”.
5] According to Dr Alfred Marshall, “Money constitutes all those things which are at any time and place generally accepted without doubt or specially enquiry as a means of purchasing commodities and services and of defraying expenses”.
6] According to Prof G D H Cole, “Money is anything that is habitually and widely used as a means of payment and is generally acceptable in the settlement of debt .”
7] According to Prof Coulborn, “It is the means of valuation and payment as both, the unit of account and the generally acceptable medium of exchange”.
8] According to J S Mill, “Money is the medium through which incomes of different members of community are distributed to them and the measure by which they estimate their possessions”.
The analysis of the above definitions highlights some important facts
1] Money has been defined in terms of the functions it performs. That is why economists like Prof Walker says “money is what money does”. It implies money is anything which performs the functions of money.
2] The essential requirement of any kind of money is that it must be generally acceptable to every member of society. It is given and received irrespective of the social status of the person, only if thinks that another person will accept it as payment for goods and services rendered or for settlement of loans. The general acceptance of anything as money does not depend on physical quality possessed by it. General acceptability is a social phenomenon and is granted to a good, when a society by law or convention adopts it as a medium of exchange.
3] The demand for money is a derived demand. It is dependent on the demand for commodities which it buys in the economy.