State two Primary functions of money.

1.	State two Primary functions of money.
Answer» Two primary functions of money are as follows: 1. Medium of Exchange—Money acts as a medium of exchange. Hence, it has removed the problem of double coincidence of wants faced under the Barter System. Money has general acceptability and purchasing power so nobody refuses to accept money in exchange for goods and services. As a medium of exchange, money helps us to purchase all goods and services from the market. 2. Measure of Value—Money acts as a common measure of value. The value of every thing can be expressed in terms of money and is known as its price, when we say that the price of one metre of cloth is Rs. 15/-, this means that in order to obtain one metre of cloth, we have give up 15 units of money.

Answer»

Two primary functions of money are as follows:

1. Medium of Exchange—Money acts as a medium of exchange. Hence, it has removed the problem of double coincidence of wants faced under the Barter System. Money has general acceptability and purchasing power so nobody refuses to accept money in exchange for goods and services. As a medium of exchange, money helps us to purchase all goods and services from the market.

2. Measure of Value—Money acts as a common measure of value. The value of every thing can be expressed in terms of money and is known as its price, when we say that the price of one metre of cloth is Rs. 15/-, this means that in order to obtain one metre of cloth, we have give up 15 units of money.

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