Medium of Exchange

Money is primarily a medium of exchange. It serves as a common medium that is acceptable in transactions for goods and services. It is a universal medium that can be used to buy anything from anywhere. Money facilitates the exchange of goods and services by eliminating the need to barter goods or services.

Unit of Account

Money is also used as a unit of account. It helps individuals to quantify the value of goods and services. Money provides a standard measure of value that is universally accepted. It enables individuals to compare the value of different goods and services and make informed decisions.

Store of Value

Money is also a store of value. It is a means of preserving wealth over time. Money can be saved and used later to purchase goods and services. It helps individuals to plan for the future and provides them with a sense of financial security.

Standard of Deferred Payment

Money also serves as a standard of deferred payment. It is used to settle debts and obligations. Money makes it possible to pay debts at a later date, and it provides a reliable means of fulfilling financial obligations.

Conclusion

In conclusion, money is a medium of exchange, a unit of account, a store of value, and a standard of deferred payment. It plays a crucial role in facilitating economic transactions and promoting economic growth. Money provides individuals with the means to purchase goods and services, quantify their value, preserve wealth, and fulfill financial obligations.

The money plays the role of medium of exchange as it is generally and freely acceptable and money is a means through which goods and services are exchanged in the economy.