Q. Define money.
Ans:- Anything which is generally acceptable in payment for goods, services and debts is known as money. According to Robertson, "anything which is widely accepted in payment for goods or in discharge of other kinds of obligation" is known as money.
Q. Mention two primary functions of money.
Ans:- The two primary functions of money are:-
a. Medium of Exchange
b. Measure of Value
Q. Mention two secondary functions of money.
Ans:- The two secondary function of money are:-
a. Standard of Deferred Payments
b. Store of Value
Q. What is full bodied money?
Ans:- Full bodied money refers to that money whose face value is equal to its intrinsic value as a commodity.
Q. What is legal tender money?
Ans:- The money which is legally tendered by the central authority is known as legal tender money.
Q. What is non-legal tender money?
Ans:- Non- legal tender money denotes that type of money which is generally accepted, but legally one is not bound to accept it.
Q5. Explain the main function of money.
Ans:- The main functions of money are:-
a. Medium of Exchange:- With the introduction of money all difficulties of the barter system have been removed. Money was now broadly accepted as the medium of exchange. People can exchange all goods and services through the medium of money.
b. Measure of Value:- The second important function of money is that money serves as a measure of value. Money serves as a unit of measurement in terms of which the value of any commodity or service can be measured and expressed.
c. Standard of Deferred Payments:- Money serves as a standard of deferred payments. Loans can be easily taken and repaid in terms of money and thus money has simplified the borrowing and lending operations.
d. Store of Value:- Money serves as a store of value. The surplus production can be converted into money through exchange and can be stored for an indefinite period. Money is the most liquid of all assets. Thus money may be held for any period and can be converted into other things when the need arises.
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Introduction to Microeconomics Part 1
Introduction to Microeconomics Part 2
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