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Factors that determine the value of money.
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[QUOTE="btaliat, post: 220541, member: 26390"] I won't waste time in explaining the meaning of value of money as justice has been done to that already by almost commentators of this post. I only need to go straight to my points. Number one factor that determines the value of money is the amount of money in the circulation. When there are more money in the circulation. There is tendency that the money will be reduced in value. For money to really have much value, it must be scarce. The moment the money is much, the price of goods will rise and there will be loss on the money value. For instance, some years back, a million Zimbabwe dollar may not buy a loaf of bread. Another reason is the outbreak of pandemic. When there is pandemic in the world, economic activities always stand still. This means people wont make money again but rather be spending money. And when the money I'm circulation reduces, whether the price of goods reduces or increases, people wont afford them. Lack of investment by the government. There are some countries that only prefer borrowing to finance their economy. They don't save or invest ok capital projects . What they do is the recurring projects that will always demand money ebery year. A country that's borrowing will always have to be servicing its debt with money, hereby reduce the value of its money against the country that it is indebted to. [/QUOTE]
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Factors that determine the value of money.
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