There are several functions of money. We previously talked about the forms of money and also the characteristics of money but now we will be talking about the functions of Money.
Functions of Money
- Medium of Exchange
- Standard of Deferred Payment
- Unit of Account
- Store of Value
- As a measure of Value
Medium of Exchange
Money is used as a medium of exchange. People use the money for the exchange of goods and services. The money came as a result of the setbacks of Trade by Barter that was used back then.
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Standard of Deferred Payment
Money can be accumulated and used to pay off debt. Since money is accumulated, it can be saved to pay the debt.
Business transactions done on credit can be settled at a later date because of money. Money has made it possible to be able to defer payment and pay at a future date.
Unit of Account
Unit of account is another function of money.
Because of money, Companies and individual can keep an accounting record of their transaction in invoices, ledgers, and bank statements.
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Store of Value
When there is no fluctuation in the value of money, it can be stored for later use. Wealth can be stored for several years as a result of money.
As a measure of Value
Money is used to compare the value of goods and services. It can also be used as a measure of wealth, and even occupation.
That will be all on the Function of Money. Please drop your comment below, we will love to hear from you.