{"id":38989,"date":"2015-07-23T23:07:40","date_gmt":"2015-07-23T17:37:40","guid":{"rendered":"http:\/\/vskills.in\/certification\/blog\/?p=38989"},"modified":"2024-04-03T13:19:20","modified_gmt":"2024-04-03T07:49:20","slug":"role-of-money","status":"publish","type":"post","link":"https:\/\/www.vskills.in\/certification\/blog\/role-of-money\/","title":{"rendered":"Role of money"},"content":{"rendered":"

\"Role<\/a><\/p>\n

What exactly money is? \u00a0What role does it play in the economy? \u00a0Is the presence of money really important for the society?<\/p>\n

Before discussing these questions, \u00a0let’s understand what exactly money is. Many people have many misconceptions about it, \u00a0for example, \u00a0if we say that a person is very rich, \u00a0we generally assume that he has a lot of money. \u00a0But this not true! This is not the way economists define the word ‘money’ . For an economists, \u00a0MONEY<\/strong> is the total of all assets present in the economy that can be used for the transactions. Now, this does not only include cash in hand but also counts demand deposits, repurchase agreements, \u00a0eurodollars, \u00a0etc.<\/p>\n

Coming to the role that money plays in the economy or its functions. It\u00a0gives us freedom and choices. It has four basic functions to perform ;<\/p>\n

* Money helps people to transfer their purchasing power from present to near future ,thus, works as the STORE OF VALUE.<\/strong><\/p>\n

* It\u00a0provides the terms in which all the transactions can be recorded, thus simplifying the complexities. It works as the UNIT OF ACCOUNT.\u00a0<\/strong><\/p>\n

* Money also hepls us to buy goods and services. It works as the most liquid asset and makes the transactions easy. Hence, performs the function of MEDIUM OF EXCHANGE.<\/strong><\/p>\n

* Further, \u00a0money can be used for making the payments in future for the goods purchased in present, \u00a0that is, buying now and paying later. In this, \u00a0it\u00a0performs the function of STANDARD OF DEFERRED PAYMENTS.<\/strong><\/p>\n

 <\/p>\n

After defining the money in economics terms and understanding it’s functions, \u00a0the question that still bother us is that why do we actually need money? Can’t our society work without money?<\/p>\n

To answer this question, \u00a0imagine a society without money . Will it be easy for people to get goods and services they want as easily as in the presence of money. Economy would take the form of barter system<\/em>. This would require the double coincidence of wants, \u00a0which is not easy to find. Thus, \u00a0barter economy only permits simple transactions. Money makes more indirect transactions possible.<\/em><\/p>\n

Click here for government certifications<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

What exactly money is? \u00a0What role does it play in the economy? \u00a0Is the presence of money really important for the society? Before discussing these questions, \u00a0let’s understand what exactly money is. Many people have many misconceptions about it, \u00a0for example, \u00a0if we say that a person is very rich, \u00a0we generally assume that he…<\/p>\n","protected":false},"author":1432,"featured_media":39026,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_joinchat":[],"footnotes":""},"categories":[1533],"tags":[2483,5444],"class_list":["post-38989","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-management-2","tag-money","tag-role-of-money"],"acf":[],"yoast_head":"\nRole of money - Vskills Blog<\/title>\n<meta name=\"description\" content=\"Learn what exactly money is? What role does it play in the economy? Is the presence of money really important for the society? 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