Main function of money in an economic system is "to facilitate the exchange of goods & services & also help in carrying out trade smoothly"
Function are as under :-
(1) Medium of Exchange:-Money facilitate the buying & selling of goods , i.e , it serves as the common medium of exchange. Everything is bought & sold through the help of money. It has helped overcome all the shortcomings of barter system.By serving as a very convenient medium of exchange, money has made the present complex system of trade to function effectively.
(2) Money As A Measure Of Value:-Money is the measuring rod, by which the values of other commodities & services are expressed. Without a measure of value, there can be no pricing process. Without a pricing process, organised marketing & production is not possible. Thus the use of money as a measure of value is the basis of specialised production. The measuring rod of money is also indispensable to all forms of economic planning. Consumers compare the values of alternative purchases in terms of money. Producer compare the relative costs of the factors of production in terms of money & also plan their output on the basis of the money yield.
Function are as under :-
(1) Medium of Exchange:-Money facilitate the buying & selling of goods , i.e , it serves as the common medium of exchange. Everything is bought & sold through the help of money. It has helped overcome all the shortcomings of barter system.By serving as a very convenient medium of exchange, money has made the present complex system of trade to function effectively.
(2) Money As A Measure Of Value:-Money is the measuring rod, by which the values of other commodities & services are expressed. Without a measure of value, there can be no pricing process. Without a pricing process, organised marketing & production is not possible. Thus the use of money as a measure of value is the basis of specialised production. The measuring rod of money is also indispensable to all forms of economic planning. Consumers compare the values of alternative purchases in terms of money. Producer compare the relative costs of the factors of production in terms of money & also plan their output on the basis of the money yield.
Oh! Good one... still, it has more imp.
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