You are here: > > Functions Of Money

Functions Of Money

Administrator by Administrator   |   7 Comments  |   58869 Views    |   3.4/5 Rating   |   Print this Article Print This Article
834 articles online.
Mar 16th, 2010
Send to friend

1. Money as a Medium of Exchange:
The function of money as a medium of exchange solves all the difficulties of barter system. There is no necessity for a double coincidence of wants in the money economy. The man with cow who wants to purchase cloth need not seek a cloth seller who wants a cow. He can sell his cow in the market for money and then purchase cloth with the money obtained.

2. Money as Measure of Value:
In money economy values of all commodities are expressed in terms of money. Money is like the yard stick of cloth merchant, as yard-stick measures all varieties of cloth, money measures the value of all varieties goods. This function of money makes transactions easy and also fair

3. Standard of Deferred Payment:
In a money economy the contracts are made for future payments terms of money instead of goods and promise to repay the loan in money. In this way money is the standard of deferred payments. This function stimulates all kinds of economic activities wjtich depend on borrowed money.

4. Money as a Store of Value:
Goods cannot be stored because they are perishable. People receive their incomes in money form and keep their savings in money form in banks.In this way, money is used to store value of commodities.

5. The essential or primary functions of money are:
a) To serve as medium of exchange.
b) To serve as a measure of value.

The later two functions are of secondary importance because they; derived functions. In modern economy, money plays a very important role. Its disappearance would cause disappearance of the economy itself.

Article Source:

Add New Comment

  • 1. Air Jordans On Sale
    good articles air jordans on sale
    (6:59 pm, 2014.03.16)
  • 2. Cheap Nike Free Run
    thank you for share! cheap nike free run
    (5:12 am, 2014.01.27)
  • 3. Louis Vuitton Outlet Store
    nice articles Louis Vuitton outlet store
    (1:56 am, 2014.01.15)
  • 4. Louis Vuitton Taschen
    thank you for share! louis vuitton taschen
    (8:40 am, 2013.07.17)
  • 5. SANTHI
    (10:16 pm, 2013.03.28)
  • 6. Jesse Ward
    im the best. thnks for the info
    (4:37 pm, 2013.02.11)
  • 7. Kareena Aujayeb
    thnK 4 z informaion
    (12:30 pm, 2012.09.24)
Latest Finance Articles
More from Administrator
  • Objectives of business

    Objectives of Business means the purpose for which the business is established. It is generally believed that the main objective of business is ta make profit and avoid loss. More >>

  • Barter system

    Barter System - Barter System is that system in which goods are exchanged for goods - Barter System More >>

  • Functions of money

    Functions of Money - Functions of Money as a Medium of Exchange, Measure of Value, Deferred Payment, Store of Value - Functions of Money More >>

  • Importance of business in the present day world

    The importance of business is that it provides products or services to customers. More >>

  • Kinds of partners

    The partners of a firm are broadly divided into three main categories. General Partners, Special Partners and Other Partners. More >>

Find More About

Rate this Article:
  • Currently 3.4/5 Stars.
  • 1
  • 2
  • 3
  • 4
  • 5
3.4 / 5 stars - 1906 vote(s)