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Definition of Money
Money is anything which is generally accepted as a medium of exchange and acts as a transfer of value, measure of value, store of value and also as a standard of deferred payment.
Functions of Money
Professor Kinley has classified the functions of Money into three groups:
1. Primary Functions
2. Secondary Functions, and
3. Contingent Functions.
Primary Functions are the most fundamental and essential functions of money. The primary functions of Money are: Serving as
a) Medium of Exchange and
b) Measure of Value.
Secondary Functions include functions of money which are derived from the primary functions. These Secondary functions of Money are: a) Acting as a Standard of Deferred Payment, b) Acting as the Store of Value, c) Helps in transfer of Value.
Contingent Functions refer to the role of Money in helping or assisting various economic entities such as consumers, producers, etc. in arriving at Economic decisions. The functions include:
a) Helping in Maximization of Utility,
b) Employment of factor Inputs while maximizing Profit,
c) Distribution of National Income and
d) Forming the Basis of Credit System.
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