Functions of money

Functions of money

1. Medium of exchange. Money is used as a medium of exchange because goods and services are exchanged for money.
2. Unit of account. Money is used as a unit that effects or carries out business transactions and accounting procedures.
3. Measure of value. The value of goods and services is expressed in terms of money, e.g., a kg of meat costs so much, etc.
4. Store of wealth (value). Money can be used to store value or wealth because it's bulky and not perishable.
5. Standard of deferred payment. Money facilitates payment of debts and transactions on some future date.
6. Money can enable specialization to take place, i.e., through demand.
7. Money solves the problem of double coincidence of wants.