How does money act as a measure of value ?

1.	How does money act as a measure of value ?
Answer» The second fundamental function of money is that it acts as a common measure of value. Just as we use kilogram in measuring weight of a commodity and metre in measuring length of a commodity, similarly, for measuring value of a commodity we take money as a unit of account. Money serves as a unit of measurement in terms of which the values of all goods and services are measured and expressed. For example, a shirt may cost Rs 500, a chair Rs 600, a book Rs 80, a pen Rs 15 and so on. When we express the value of a commodity in terms of money, it is known as price. Thus, money has provided a language of economic communication.

Answer»

The second fundamental function of money is that it acts as a common measure of value. Just as we use kilogram in measuring weight of a commodity and metre in measuring length of a commodity, similarly, for measuring value of a commodity we take money as a unit of account.

Money serves as a unit of measurement in terms of which the values of all goods and services are measured and expressed.

For example, a shirt may cost Rs 500, a chair Rs 600, a book Rs 80, a pen Rs 15 and so on. When we express the value of a commodity in terms of money, it is known as price. Thus, money has provided a language of economic communication.

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