money functions
TRANSCRIPT
The word money is being derived
from the Latin word ‘MONETO’.
Money can be defined as any
commodity that is generally
accepted as a medium of exchange
and a measure of value.
Functions of Money
• Primary Functions:
Medium Of Exchange: The fundamental
role of money is to serve as a medium of
exchange . A consumer can purchase any
commodity or service with help of
money.
Measure of Value : The value of all goods and services is expressed in terms of money . It helps to compare value of all commodities . Every country has a standard money or a monetary unit in terms of which values are expressed and measured which is known as currency such as dollars, pounds, yen etc
Secondary Functions:
a) Standard Of Deferred Payments : Future Payments are termed as deferred payments. Deferred payments are possible only because of money . Money makes possible the credit transactions to happen . Money acts as a standard of deferred payments.
(b) Store of Value : Money works as a store of value along with satisfaction of present wants , provisions for future wants is equally important . It serves as a store of value because money has purchasing power .
c) Transfer of Values : Today with the extension of trade among various countries and organizations ,it becomes necessary to transfer purchasing power from one place to another.