Functions of Money (primary)

Functions of Money
Money as already said, removed the inconveniences of barter and showed the world the path of.economic activity and development. As the economy grew, importance of money also increased. In today's world money performs variety of vital functions
which arc described below.
Primary Functions:
Primary functions are those which are performed by money on account of its major characteristics. These are as follows:
1. Medium of Exchange:
Money serves as a medium of exchange. It is used to make payments for goods and services. Goods can be bought and sold in term of money without any difficulty. So it is a medium*that helps buyers and sellers to complete their transactions.
2. Standard of Value:
Money serves as a standard of value. The goods and services of modern world are priced and valued in terms of money: This has greatly helped in reducing the time and effort to make transaction. Money measures Values of everything (except that of life, love, care, passion, Honor and some other things of same kind) in the same way as kg is used to measure weight, km is used to measure distance.
3. Store of Value:
Money is also the store of value. It.can be saved for use injuture In the form of money, purchasing power can be stored to buy goods in future.-However this function of money is normally effected by the rate of inflation prevailing in tire economy.
4. Standard of Deferred Payment:
Money is. a standard of deferred payment. It is used to express debt and business
obligations. Goods are normally bought and sold on credit and the credit is expressed in
term of money