Question

explain 3 functions of money

Answer 1

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Three basic function of money are:-

1. Medium of exchange- The most important function of is that it serves as a medium of exchange. Money commands general purchasing power to purchase goods and services which people want. Money is generally and widely accepted as medium through which most of the purchase or sales are made.

2. Unit of Account- The second important function of money is that it acts as a common unit of account or measure of value. Money serves as a unit of measurement in terms of which the values of all goods and services are measured and expressed. When we express the value of a commodity in terms of money, it is known as price.

3. Store of Value- Money also serves as a store of value, i.e., people can keep their wealth in the form of money. Money is a perfectly liquid asset, i.e., it is ready and generally acceptable means of payment. Money allows us to store purchasing power which can be used at any time in future to purchase goods and services, including other assets.

Answer 2

Money is often defined in terms of thethree functions or services that it provides. Money serves as a medium of exchange, as a store of value, and as a unit of account. Medium of exchange. Money's most importantfunction is as a medium of exchange to facilitate transactions.