Meaning of Money:

Money is a monetary thing which is acceptable by all, generally it is a material of exchange. What we use to pay for things is referred as money. Money is an important element of modern civilization. Functions of money is a broad and very important to understand the meaning of money.

According to Crowther “money is anything which is generally accepted as a medium of exchange and at the same time as a measure and as a store of value”.

Money can take various forms, including physical objects such as coins and banknotes as well as digital forms such as electronic balances in bank accounts. Apart from its form, money plays a central role in modern economies by enabling economic transactions, facilitating trade, supporting investment and savings, and serving as a basis for measuring and comparing the value of goods, services, assets, and debts.

Functions of money:-

• Primary function
• Secondary function
• Contingent function
• Other function

Primary functions:-

1. Medium of exchange: It facilitates exchange through a common medium that is currency it solves the problem of barter system that is lack of double coincidence of wants etc.
2. Measures of value: The value of goods and services can be expressed in terms of money it has provided a common yardstick to measure the value of all commodities and service in a common unit known as price.

Secondary functions:-

1. Standard of deferred payment: Money can be used for future payments defer payments referred to the future payments and contractual payments such as loans and interest payments salaries Etc. this helps for expansion of trade based on credit.
2. Store of value: People have a tendency to save certain portion of their income in the form of savings and accumulate wealth people save money to meet unforeseen contingencies wealth can be easily store in the form of money without any loss in its value.
3. Transfer of value: Values and wealth can be transfer from one place to another. Similarly money can be transferred easily from one place to another and one person to another it implies that purchasing power can be transferred.

Contingent functions:

David keenly has termed as other functions as contingent functions

1. Distribution of national income: Money facilities the distribution of national income among the four factors of production as a reward in the form of rent wages interest and profit.
2. Basis of credit: The modern economy is based on credit money serves as a basis of the vast structure of modern credit system.
3. Maximize consumers and producer satisfaction: A consumer who aims at maximum satisfaction by sports and services in such a manners at the price of each good is equal to its marginal utility. Similarly money helps in equalizing the marginal productivity of various factors. The aim of producer is to maximize his profit by equalizing the marginal productivity of each factor with its price.
4. Liquidity and uniformity: Money gives liquidity to various forms of wealth full stop that is money is most liquid form of all the sets and wealth money can be converted into any type of assets and any type of asset can be converted into money.

Other functions:-

1. Helps in making decision: Money act as a store of value and a consumer meets his daily needs on the basis of money held by him it helps in making decisions.
2. Generalized purchasing power: The purchasing power of money can be used buy any goods and services there is no hard and fast rule for using money for a specific purpose.

also read: explain the supply of money.