money functions

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.

Kinds of Money

• Metallic Coins

• Paper Money