Money functions

Money has certain functions thanks to which people have the possibility to use it in a certain way. Usually people say about the next money functions:

The first one is the measure of value. Different goods are compared and exchanged one with another on the base of the equivalent of these products in exchange on money. In such way goods get the price. Money is also used to register the cost of some economic parameter or for the commitment record.

The second function is the medium of exchange. Money is like the mediator in the good circulation. The buyer gives the certain product to the seller getting the certain good or service. In such case the liquidity of money is very important.

Another function is the means of hoarding. Money that doesn't participate in the circulation directly has its function. Money as the man of hoarding allows transmitting the purchase power from the present into the future. But the purchase power of the person also depends on inflation.

These three functions divide money into two kinds that are the money that participate in circulation and money as the mean of hoarding. These are the main money functions.

But money is also the standard of deferred payments and the international money. As the standard of deferred payments money is rather convenient as all debts may be paid with the help of money. It is more comfortable than to return the good especially if it was damaged. Money is also the instrument of paying in other countries.