Money and Banking — Economics STD 12 Humanities & Commerce — Question

Money is define as something that serves as a medium of exchange, a unit of accounting, and a store of value.

Medium of exchange function:

1. Money as the Medium of Exchange:

Money came into use to remove the inconveniences of barter as money has separated the act of purchase from sale. Medium of exchange is the basic or primary function of money.

2. Money as the Standard of Deferred Payments:

Deferred payments are payments which are made some time in the future. Debts are usually expressed in terms of the money of account. Loans are taken and repaid in terms of money.The use of money as the standard of deterred or delayed payments immensely simplifies borrowing and lending operations because money generally maintains a constant value through time.