15-Function of Money

Question 1

Define Money

Answer 1

Anything that is Generally Accepted as a MEDIUM of Exchange

Question 2

State the Functions of Money

Answer 2

–> Medium of Exchange
–> Store of Value
–> Measure of Value
–> A method of Deferred Payment

Question 3

Express the Functions of Money
–> Medium of Exchange

Answer 3

Money Allows Economic Agents to Exchange Goods without the need for Barter

Question 4

Express the Functions of Money
–> Store of Value

Answer 4

Money generally Retains its Value and can be Saved to Purchase Goods in the Future

Question 5

Express the Functions of Money
–> Measure of Value

Answer 5

It Establishes the Value of a Good making it easier For Price Comparison

Question 6

Express the Functions of Money
–> A method of Deferred Payment

Answer 6

It enables Borrowing and Lending. It means Someone can borrow money now to buy goods today and pay for it in a Future Time Period (Mortgage on a house, loan to purchase a Car)

Question 7

Express the Significance of the Function of Money for Specialization

Answer 7

Firms and Individual can Only Specialize in the production if they can Exchange this Output for Other Goods they need
Money acts as a Medium of Exchange and Avoids the Need for Barter, Money also has the benefit of being Divisible, Unlike Particular Good
Thus the Development of Money has enabled Specialization and Trade to Grow