Define money and it's functions ?
Money is any substance which is used as payment for various goods and services having some stored value in it. There are different types of money such as commodity money, fiat money, etc which are considered as an acceptable medium of exchange.
The following are the functions of money:
1) Medium of exchange: Medium of exchange is the basic or primary function of money. Through this function, it has overcome the shortcomings of barter system. The use of money facilitates exchange, exchange promotes specialisation Increases productivity and efficiency.
2) Measure of value: Money is a common measure of value so it is possible to determine the rate of exchange between various goods and services purchased by the people.
3) Standard of deferred payments: Money is also inevitably used as the unit in terms of which all future or deferred payments are stated. Deferred payments are payments which are made sometime in future.
4) Store of value: Wealth can be stored in terms of money for the future. Being non-perishable and also comparatively stable in value, the value of other assets can be stored in the form of money.
5) Transfer of value: The value of any asset can be transferred from one person to another or to any institution or to any place by transferring money. Transfer of purchasing power, which is necessary for commerce and other transactions, has become possible because of money.