Money and its Functions

In songs and popular language “money” stands for many things. It’s a symbol of success, it’s a source of crime, and it makes the world go round.

Along with the Market, Manpower and Material, Money is the last of the big M's that make business function. It is in the centre of any business activity.

Money is anything used by a society to purchase goods, services or resources. Different groups of people have used all sorts of objects as money – whale’s teeth, stones, beads, gold and silver, for example. Today, the most commonly used objects are metal coins, paper bills,checks and plastic money.

For money to have value, it must perform certain functions, it must be easy to use, and it must be trusted.

Money has three main functions in any society:

Serves as a Medium of Exchange. Money, the medium of exchange, is used in one half of almost all exchange. Workers exchange labour services for money. People buy and sell goods in exchange for money.

Serves as a Measure of Value. Money serves as a measure of value because the prices of all products and resources are stated in terms of money. Money is used as a yardstick for all bookkeeping, budgeting and management.

Represents a Store of Value. Money is a store of value because it may be held and spent later. It is a means for retaining and accumulating wealth.

Exercises in Word Study

Ex.1. Form adjectives from the following nouns:

symbol, success, crime, money, difference, value, product, wealth.