ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Money facilitates transactions of goods and services as a medium of exchange. Producers sell their goods to wholesalers in exchange of money. Wholesalers, in turn, sell their goods to the retailers and the retailers sell these goods to the consumers in exchange for money.

Detailed explanation-2: -Money is a medium of exchange as it is used to make purchases and buy the goods and services one needs. Money also serves as a unit of account as it is used to measure the relative value of goods and services available in society.

Detailed explanation-3: -Money is called medium of exchange because money is a widely accepted token that can be used for exchange of any good or service. In old days, barter system was used as medium of exchange and later it was gold.

Detailed explanation-4: -Money is a liquid asset used to facilitate transactions of value. It is used as a medium of exchange between individuals and entities. It’s also a store of value and a unit of account that can measure the value of other goods.

Detailed explanation-5: -In Money and the Mechanism of Exchange (1875), William Stanley Jevons famously analyzed money in terms of four functions: a medium of exchange, a common measure of value (or unit of account), a standard of value (or standard of deferred payment), and a store of value.