Advertisements
Advertisements
Questions
Explain the ‘unit of accounts’ function of money. How has it solved the related problem created by barter?
Explain the significance of the 'Unit of Account' function of money
Advertisements
Solution
Unit of Account
It is the monetary expression of the market value of goods and services. These goods are measured in terms of gram, litre and metre. This common unit of measurement enables the buyer and seller to compare the value of goods in the market. This enhances the activities of buying and selling in the market.
The common device to measure goods is completely absent under the barter system. The sale and purchase of goods occur at the same time. Their sale and purchase values also remain equal at that point. After existence of money, a person can purchase or sell goods with cash at any point of time. Thus, the act of purchase and sale has been separated.
The introduction of money resulted in the end of the barter system where the value of goods are measured in terms of money and are hence progressed with market activities.
APPEARS IN
RELATED QUESTIONS
Explain the significance of 'medium of exchange' function of money
State whether the following statements are TRUE or FALSE with reason.
Cheque is not legal tender money.
What is a barter system? What are its drawbacks?
Answer the following question
What are the contingent functions of money?
Explain primary, secondary and contingent functions of money.
Fill in the blank with appropriate alternatives given below
Medium of exchange is __________ function of money.
Money is something that is ______.
Medium of exchange and measure of value is ______.
From the following data, calculate "Net Value Added at Factor Cost".
| S.no. | Content | (Rs. in Lakhs) |
| (i) | Sales | 400 |
| (ii) | Change in Stock | (−) 20 |
| (iii) | Intermediate consumption | 200 |
| (iv) | Net indirect taxes | 40 |
| (v) | Exports | 50 |
| (vi) | Depreciation | 70 |
Which of the following are the functions of money?
What does money provide when individuals compare prices to determine the worth of goods?
Paying rent each month is an example of which primary function of money?
Which function of money is used when a person sells vegetables for cash and then buys clothes?
Which function of money makes it easy to repay loans in the future?
Banks use public deposits of money to create loans. Here money is mainly acting as ______.
