Which are functions of money?
Store value
Producer of resources
Unit of account
Medium of exchange
Record of finances
Unit of output
Its: A C D
A C E
The functions of money are as follows:
1. Medium of Exchange: Money serves as a commonly accepted medium for buying and selling goods and services. It eliminates the need for bartering or the exchange of one good or service for another, making transactions more efficient.
2. Unit of Account: Money provides a standard unit of measurement for pricing goods, services, and resources. It helps in comparing the value of different items and facilitates economic calculations, planning, and financial management.
3. Store of Value: Money serves as a means to hold wealth over time. It allows individuals and businesses to save their earnings and preserve their purchasing power for future use. Money as a store of value should retain its worth or at least have stable value over time.
4. Record of Finances: Money helps in maintaining a record of financial transactions, making it easier to track income, expenses, profits, and losses. Through money, it becomes possible to analyze financial performance, make financial decisions, and measure economic progress.
While money indirectly plays a role in the production of resources and the measurement of outputs, they are not considered direct functions of money. The production of resources is determined by factors such as labor, capital, and entrepreneurship, while the measurement of output is typically quantified in units such as tons, barrels, or any other relevant unit specific to the particular industry or sector.