ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -One of the first, and most important functions of money is that it is used as a medium of exchange. Now, when there are high rates of unanticipated inflation, money loses its value and therefore cannot function as a medium of exchange as people lose confidence in money.

Detailed explanation-2: -To summarize, money has taken many forms through the ages, but money consistently has three functions: store of value, unit of account, and medium of exchange.

Detailed explanation-3: -With the help of money, people can store surplus purchasing power and use it whenever they wish to. Money serves as a store of value for goods in liquid form. Savings in the form of money are not only secure but the possibility of it being disrupted is very low. Besides, money can be carried around and is portable.

Detailed explanation-4: -In the monetary economy, money is considered a store of value, where it can be used as a means of saving and allocating capital. Money’s property as a store of value facilitates a transfer of purchasing power over time.