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There was a time when things like cattle, salt, shells, etc., were used as the media of exchange. But all these suffer from drawbacks. Precious metals came to be accepted as money, because they had certain advantages. Gold and silver have been accepted as the media of exchange; but that is not the only function of money. 1_______. Distance is measured in yards, feet, inches, etc.; temperature is measured as so many degrees fahrenheit and centigrade; weight is measured in ounces, pounds, tons, etc., and the value of any article is measured in rubles, dollars, shillings, etc. If a wrist watch is more valuable than a book, you can explain that the price of a watch is $40 and that that of a book is $5. 2_______. That is how you measure the value in terms of money. 3_______. Two merchants may be buying and selling a lot of goods from each other. Instead of making payments every day to each other, they may find it much more convenient to write down accounts, and then at the end of every month or year, they may adjust their accounts and make a small amount of payment from the debtor to the creditor. These accounts are written in terms of the currency of the country concerned. Money also functions as a “store” of value. If you do not want to spend your money today, you may keep it with you, as long as you wish. 4_______. For the same reason money can also be used as a standard of deferred payments. If you buy something on credit, you may make the payments at the end of the month, or at any other convenient time. Whether you pay today or after a month it makes no difference in the value of money.
Money also acts as the measure of value
The watch is more valuable than the book, by $35
From this it also follows that money acts as a unit of account
That is how you can store value
