Chapter 3 Part 1 - Money

Economics Class 12
Macroeconomics

## Definition and Function of Money

#### Does Money only act as Store of Value?

No

Other assets also act as store of value, like Property, Gold, stocks etc

#### Why are these assets not used in place of money?

Because these are not easily convertible

Also they do not have universal acceptability

### NCERT QUESTIONS

#### Question 2

What are the main functions of money?

How does money overcome the shortcomings of a barter system?

### ASSERTION AND REASONING QUESTIONS

In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R).

Assertion (A): Money is what money does.

Reason (R): Money facilitates exchange of goods and services.

Mark the correct choice:

1. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).
2. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).
3. Assertion (A) is true, but Reason (R) is false.
4. Assertion (A) is false, but Reason (R) is true.

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### Transcript

Definition of Money Money is medium of exchange, Measure and Store of Value and Means for Standard deferred payment Money is Medium of Exchange Measure of Value Store of Value And Means for Standard Deferred Payment Goods and Services can be exchanged because of money We decide Price of different goods and services in terms of money Money can be saved and Stored for use by future generation If Payment to be made in future, we know amount to be paid What are the Functions of Money Functions of money can be derived from Definition of Money Definition of Money Functions of Money Money Act as Medium of Exchange Goods and Services can be exchanged for money Money Act as Measure of Value We decide Price of different goods and services in terms of money Money Act as Store of Value Money can be saved and Stored for use by future generation Money Act as Means for Standard of Deferred Payment If Payment to be made in future , we know amount to be paid