Write Short Notes on Secondary functions of money.
Money refers
to a common medium of exchange that is issued under the law of government and
acts as a legal tender for the whole country.
The secondary function of money includes
money as a store of value and money as a standard of deferred payment:
1. As a store of value, it refers to the function of money that
helps individuals in storing their wealth in the form of money. Therefore,
money acts as an asset that sustains value over a period of time
2. As a standard of deferred payment, it refers to one of the most
important functions of money. Deferred payments refer to payments made on
loans, salaries, pensions, insurance premium, interests, and rents. The
necessary condition for deferred payment is that the amount of repaid money
should be the same as it was at the time of purchase of the good. Since all the
goods and services can be expressed in terms of money, it makes the future
payments easy and functional.
Money refers to a common medium of exchange that is issued under the law of government and acts as a legal tender for the whole country.
The secondary function of money includes
money as a store of value and money as a standard of deferred payment:
1. As a store of value, it refers to the function of money that helps individuals in storing their wealth in the form of money. Therefore, money acts as an asset that sustains value over a period of time
2. As a standard of deferred payment, it refers to one of the most important functions of money. Deferred payments refer to payments made on loans, salaries, pensions, insurance premium, interests, and rents. The necessary condition for deferred payment is that the amount of repaid money should be the same as it was at the time of purchase of the good. Since all the goods and services can be expressed in terms of money, it makes the future payments easy and functional.
