It has made transactions easy and simplified the problem of measuring and comparing the prices of goods and services in the market. if(MSFPhover) { MSFPnav1n=MSFPpreload("../_derived/up_cmp_quad010_up.gif"); MSFPnav1h=MSFPpreload("../_derived/up_cmp_quad010_up_a.gif"); } Report a Violation. Money serves as a yardstick for measuring the value of goods and services. Other assets like houses and shares have to be sold first and converted into money and only then they can be used to buy other things. By acting as a common denominator or numeraire, money has provided a language of economic communication. services.

By acting as a store of value, money provides security to the individuals to meet unpredictable emergencies and to pay debts that are fixed in terms of money. can of diced toma-toes for $1.75 or the 28 oz. For example, it is much easier to transfer one lakh rupees through bank draft from person A in Amritsar to person B in Bombay than remitting the same value in commodity terms, say wheat. PreserveArticles.com: Preserving Your Articles for Eternity. Gold could be kept safely without deterioration. In the barter economy a great difficulty was experienced in the exchange of goods as the exchange in the barter system required double coincidence of wants. Money is any good that is widely accepted in exchange of goods and services, Total output of the country is jointly produced by a number of people as workers, land owners, capitalists, and entrepreneurs, and, in turn, will have to be distributed among them. Through money, value can be easily and quickly transferred from one place to another because money is acceptable everywhere and to all. Thus store of value function is also called asset function of money. if(MSFPhover) { MSFPnav4n=MSFPpreload("../_derived/next_cmp_quad010_next.gif"); MSFPnav4h=MSFPpreload("../_derived/next_cmp_quad010_next_a.gif"); } 5 Main Difficulties Found in Barter System – Discussed. Now, let's take a look at how economists view the basic functions of money. Money helps in the distribution of national product through the system of wage, rent, interest and profit. if(MSFPhover) { MSFPnav3n=MSFPpreload("../_derived/up_cmp_quad010_up.gif"); MSFPnav3h=MSFPpreload("../_derived/up_cmp_quad010_up_a.gif"); } Store of value: Money is the most liquid asset (Liquidity measures how if(MSFPhover) { MSFPnav2n=MSFPpreload("../_derived/next_cmp_quad010_next.gif"); MSFPnav2h=MSFPpreload("../_derived/next_cmp_quad010_next_a.gif"); } Money facilitates the division of national income between people. process of barter (goods would be traded for other goods in transactions // -->. Unit of account: Money is the common standard for measuring relative can be added up. Thus if the money is to serve as a fair and correct standard for deferred payments, its value must remain stable. It is a convenient way to store wealth.

Another function of money it that it serves as a standard for deferred payments. Three functions of money Medium of exchange: Money can be used for buying and selling goods and Money being the most liquid of all assets is a convenient form in which to store wealth, that is, money can be held as an asset. It also provides assurance that attractive future buying opportunities can be exploited. Money being the most liquid of all assets is a convenient form in which to store wealth, that is, money can be held as an asset.

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