Function of Money
What are the functions of money?
Functions of Money The functions of money are as follows:
- Primary Functions: The primary functions of money are as follows:
- Medium of exchange: Money has the quality of great acceptability. As such, all the forms of exchange take place in terms of money,
- Measure of value: The second important function of money is that it measures the value of goods and services. In other words, the price of all the goods and services is expressed in terms of money,
- Secondary Functions: The secondary functions of money are as follows:
- Store of value: Money serves as a store of value. People can hold their wealth in the form of money. Individuals try to save part of their income for their future needs. This is called the store of value.
- Transfer of value: Money serves as the transfer of value. With the help of money, one can transfer value of his wealth or property from one place to another.
- Standard of deferred payment: Money serves as the standard of deferred payment, It refers to those payments which are made sometimes in future. Payment of a loan also refers to the differed TO Both lending and borrowing are done in terms of money payment.
- Contingent Functions: Money is the basis of credit and distribution of national income. It helps to derive maximum satisfaction and keep wealth in the liquid form.