Money And Banking

Question 1

What are the functions of money?

Answer 1

Primary-
1.medium of exchange
2. Measure of value

Secondary-
1. Store of value
2. Standard of deffered payment

Question 2

Explain primary part of “function of money”.

Answer 2

Medium of exchange -
1.Act of “sale and purchase” is possible
2. Removes limitation of barter system I.e. double coincidence of wants

Measure of value
1. All goods and services have value which can be measured today in terms of money
2. Allows comparison

Question 3

“Measure of value “ is also known as _________

Answer 3

Unit of account

Question 4

Explain secondary part of “ functionof money”.

Answer 4

Store of value
1. Wealth can be easily stored
2.purchasing power can be shifted from present to future

Standard of deffered payment
1.credit transaction and installments are now possible
2. Function of banks and capital market evolve due to this function only