Money And Near Money

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Money And Near Money

When we talk about wealth of an individual, we think in terms of money that he has either in cash or in the banks, the investment that he has made in bonds, debentures, shares and securities, the about of gold and silver that he possesses, land and buildings that he owns and so on. This shows that money is money is only of the many forms in which an individual holds wealth. Similarly, the business firms too hold their wealth in the form of cash balance(money), investment in stocks, shares, securities, etc., the factory buildings and warehouse, capital equipment and machinery, stocks of raw materials and finished goods. The essential point to note is that individuals as well as business in enterprises hold their wealth partly in the most liquid form, viz., cash balance, partly in a slightly less liquid form such as bonds, treasury bills, debentures, bills of exchange, etc., which are called near-money assets and the remaining in the form of real wealth, viz., factories, buildings, machinery, stock of finished and semifinished goods and raw materials.


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