Question

How does money act as a standard of deferred payment?

Answer 1

Money acts as a standard of deferred payment. It means payment to be made in future can be expressed in terms of money. Credit is given in terms of money. If a person needs $10$ kilograms of rice but does not have the required amount of money with him at the time, he borrows this amount. The person needed rice, but he borrowed money. He did not borrow rice. He will return money to the lender, after the agreed period. That's why money is called standard of deferred payments.