Question

How is money used in everyday life? Explain with examples

Answer 1

Money is used in buying something.
Example-we buy fruit and vegetables

Answer 2

Money is used in obtaining the basic necessities of life including food, clothing, and shelter. It is also essential in getting access to services such as education, transportation. healthcare services, sanitation and other means of entertainment.

The following are the uses or functions of money.

1. Medium of exchange

Money acts as a medium of exchange as it facilitates exchange through a common medium, i.e. currency. In other words, money helps in the buying and selling of goods. For example, a person can sell his goods to another for money and that person can use money to purchase goods of his choice. Money solves the problem of double coincidence of wants.

2. Unit of value

The values of goods can be measured in terms of money. It is a common medium through which we can calculate the value of each and every good. The value of a good in terms of money is called the price. In barter system the lack of a common denominator for measuring values of goods was a major drawback.