Money performs several functions like facilitating optimum allocation of the country’s resources, functions as a medium of exchange and a measure of value, guides economic activity and is essential for facilitating distribution of national income.
What is the role of money in our life?
However, in real life money is a very important matter in peoples lives. Money plays a huge role in the society in variety of ways such as in business, at peoples job, and even in education. Money helps people achieve a better quality of education, larger chance of business success, and higher work output.
What are the roles of money?
Functions of Money Money has three primary functions. It is a medium of exchange, a unit of account, and a store of value: Medium of Exchange: When money is used to intermediate the exchange of goods and services, it is performing a function as a medium of exchange.
How does money play a role in development?
Money plays a crucial role in development. Money is the product of organization. In earlier societies, land was the principal form of wealth. The productivity of the land was the primary resource for development and that productivity depended on the organization of society for agricultural production.
How is money important to the functioning of an economy?
Role of money in smooth functioning of an economy: Money helps in the smooth functioning of the economy in the following ways: Introduction of money eliminates all the inconveniences of barter system. It provides purchasing power, to buy goods and services and factors of production directly.
Why are banks important in a developing economy?
When business expands, more money is needed for exchange transactions. The legal tender money of a country cannot usually be expanded quickly. Bank money can be increased quickly and used when there is need of more money. In a developing economy (like that of India) banks play an important part as supplier of money.
Why was the introduction of money so important?
Introduction of money eliminates all the inconveniences of barter system. It provides purchasing power, to buy goods and services and factors of production directly. Remuneration to all factors of production can be made in terms of money. By using money as a unit of accounts, debits and credits of transaction can be maintained in an economy.
