Functions of money

Functions of money - Functions of money As per Walkers...

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Functions of money: As per Walker’s definition money has to perform four major functions. If in reality money is found to be performing any additional function then it is directly or indirectly connected with these four functions. The first two of these functions medium and measure are known as 'M' or original functions of money. It is due to the fact that money was originally invented to perform these functions. The other two are ’S’ functions to act as a standard and store ; these are its derived functions. Once the money was in use it could prove itself capable of performing these functions as well. Now let’s look at the functions of money more closely. i) Medium of Exchange: Money is used as a common medium or means of buying and selling all goods and services. In the absence of money exchange activity used to take place in the barter form. Barter exchange means the direct exchange of goods against goods. Cloth is sold in exchange of sugar (which is therefore bought) or sugar is sold in terms of fruit (which is again being purchased) etc. But under such a system of exchange various inconveniences crop up. The
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This note was uploaded on 11/17/2011 for the course EC ec 201 taught by Professor - during the Fall '10 term at Montgomery.

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Functions of money - Functions of money As per Walkers...

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