Which of the following is NOT a function of money
(A) Medium of exchange
(B)Control rising prices
C)Store of value
(D) Measure of value
Answers
Answer:
Option B - Control rising prices is the correct answer.
Explanation:
Money: Money is a "blessed blessing that benefits us only when we part with it." Money is what people use to buy and sell goods and services on a regular basis, thus it must be generally accepted by both buyers and sellers. Because money has taken many different forms in different civilizations, this concept of money is purposely adaptable.
Functions of money:
Medium of exchange:
- Money overcomes the difficulties that the barter system has created.
- To begin with, money functions as a medium of trade, which means it operates as a middleman between the buyer and the seller.
- Instead of exchanging shoes for accounting services, the accountant now exchanges money for accounting services.
- The funds are then utilised to purchase shoes.
- Money must be widely accepted as a method of payment in the marketplaces for products, labour, and financial capital to act as a medium of exchange.
Store of value:
- Money, on the other hand, must function as a store of value. We saw an example of a shoemaker trading shoes for accounting services in a barter system.
- However, she runs the risk of her shoes going out of style, particularly if she stores them in a warehouse for future use—their value will depreciate with each passing season. Shoes are not a good value retailer.
- Money is a much more convenient way of holding value.
- You know you don't have to spend it right away because it'll be worth the same the following day or the next year.
- Money's role does not need that be a perfect store of value.
- Money loses some purchasing power each year in an inflationary economy, but it still has value.
A measure of value/ unit of account:
- Third, money is used as a unit of account, which means that it is used to measure other values.
- Money serves as a common denominator, a type of accountancy that makes thinking about trade-offs easier.
Standard of deferred pay:
- Finally, money has to function as a standard for deferred payment.
- This means that if money can be used to make purchases today, it must also be permissible to make future-paying purchases today.
- Loans and future commitments are expressed in monetary terms, and the deferred payment standard is what permits us to purchase goods and services today and pay later.
Money serves as a medium of commerce, a store of value, a unit of account, and a standard of deferred payment, among other things.
Hence, control rising prices is not a function of money, it is not ruled by money.
#SPJ3