Which function of money is highlighted in the given statement: ‘It works as common denomination’?
Which function of money is highlighted in the given statement: ‘It works as common denomination’?
(a) Store of value
(b) Unit of value
(c) Medium of exchange
(d) None of these
Anurag Pathak Changed status to publish December 15, 2023
Ans – (b)
Explanation:
Money as a measure (unit) of value means that money works as a common denomination, in which values of all goods and services are expressed.
1. By reducing the value of all goods and services to a single unit (i.e., price), it becomes very easy to find out the exchange ratios between them and comparing their prices.
This function facilitates the maintenance of business accounts, which would be otherwise impossible.
Money helps in calculating relative prices of goods and services. Due to this reason, it is regarded as a ‘Unit of Account’.
For instance, ‘Rupee (₹) is the unit of account in India, ‘Pound in England and so on.
Anurag Pathak Changed status to publish December 15, 2023
