functioning of money
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Answer:
Money is often defined in terms of the three 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 important function is as a medium of exchange to facilitate transactions.
Money is the medium of the exchange that is used for dealing with goods and services. Money a monetary instrument has a certain value.
EXPLANATION-
Money value can be described based on the material it is made up or the value gives to it. Money has solved many problems of barter systems like deferred payments, value ascertains,easy exchange, etc. The function of money has been distinguished based on primary and secondary.
=》 Primary function-
•The measure of value- Money provides the appropriate and exact value of exchange for the good or service they are being exchanged with. For example - If a chocolate bar costs 50 rupees. We have a 50 rupees currency to exchange it with.
•The medium of Exchange - This is the most important factor why the money was discovered was to work or channelizing as the medium of exchange which was missing in the barter system and make the exchange of goods and services a long process.
=》 Secondary function -
• Deferred payments - He also helps to make future payments for the goods or services we buy in a current timeline. For example- Payments through EMI or Installments.
• Store of Value - Money can be stored in any form with us which was not possible in the batter system due to the exchange of goods and services that can be stored for long terms.
• Transfer of value - The money value can be transfer easily from one to another person as it has fixed values. For example- I have to give 10,000 rupees to one of my suppliers. So, to transfer these 10,000 rupees can he has done through the currency amounting that.
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