Money is a way to store wealth. Consumers compare the values of alternative purchases m terms of money Producers also compare the values of alternative purchases m terms of money. So invention of money is not an unmixed blessing.
For example Rama wants to exchange rice for cloth. Transactions are of two types, namely, cash transaction and credit transaction. Rama will give his rice to Hari and in exchange Hari will offer his cloth to Rama.
It is difficult to settle the exchange between rice and goat. Medium of exchange and measure of value are primary functions because they are of prime Importance whereas standard of deferred payment and store of value are called secondary functions because they are derived from primary functions.
As for example, most of the contracts in Germany were made in Swiss Frank or U. Modern economists are laying stress on liquidity of money. Home Economics Secondary Functions of Money: They are medium exchange and measure of value.
However, evils of money are many. As we know all capital is wealth. Money has a unique nature of durability and stability in value; thus it is can be stored for a long time.
Money is available in fractional denomination, ranging from Rs 1 to Rs 1, As such, money also serves as a unit of account.
This function facilitates maintenance of business accounts, which would be otherwise impossible. It is, in fact, very difficult to calculate the factor income without money. Money has a direct impact on the economic into the bank. Money is easily portable. So it is convenient to store wealth in the form of money because money is the most liquid of all assets.
Influence on the economic policy: Aid to specialization, production and trade: It is the most essential function of money. There is also the danger of theft and fire. Money is easily portable. Now the loans can be taken from banks and financial institutions. Primary Functions; Secondary Functions; Contingent Functions; Primary Functions: Medium of Exchange: Money serve as a medium of exchange.
It is used to make payments for goods and services. Different goods can be sold in terms of money and this money can be used to purchase other goods.
Secondary Functions of Money: The relatively less important functions of money are called secondary function. Since, this function originates from primary functions. These functions are also called derived functions. The secondary functions of money are as follows: – Secondary Functions of Money.
3. Money, as a medium of exchange, means that it can be used to make payments for all transactions of goods and services.
It is the most essential function of money. Money has the quality of general acceptability So, all exchanges take place in terms of money. 1. This function has removed the major. Secondary Functions: Monetary Management: Money is very important factor of monetary and fiscal policies.
Collection of taxes and public finance management is only possible in terms of money. Collection of taxes and public finance management is only possible in terms of money.
Secondary functions of money: 1:Aid to specialization production and trade:The use of money has helped in removing the difficulties of barter. 2:Influence in income and consumption:The use of money has a direct bearing on the levels of income and consumption in the country.
Secondary Functions of Money UnitofaccountIn addition to its two primary functions of serving as a medium of exchange and as a common measure of value, money performs the secondary, derivative or subsidiary functions of serving as a standard of deferred payments, a store of value and transfer of value - Secondary Functions of Money .Secondary functions of money