Question

Explain the following function of money:

Store of value

Answer 1

1. Money acts as a store of value. It means people can store their wealth in the form of money. Before the evolution of money, it was not always possible to store the wealth.
2. As the perishable commodities, i.e., wheat, rice, vegetables, which were not needed at a time, could not be stored for a long time.
3. Money has facilitated the store of value. Though there are some other things which can be stored like money as gold, bond, shares, debentures, etc. But money is considered to be a better storage of value in terms of its liquidity and longevity.
4. It possesses the immediate purchasing power which other goods does not. Similarly it can be saved for very long period. Thus, in the form of money, purchasing power can be stored and can be used, at any time as and when needed.