Which of the following statements regarding the functions of money is/are true?
1. Money as a unit of account means it is a standard numerical unit of measurement of the market value of goods, services
and other transactions.
2. Money as a standard of deferred payment is not a significant function because modern economies rarely use money for
future payments.

Correct option is D

The correct answer is (d) Only 1

Explanation:

Statement 1: True.

• Money as a unit of account refers to its role in providing a standard numerical unit of measurement that helps in the pricing of goods, services, and other transactions.
• This means that money is used to compare the values of different goods and services. For example, we price goods in terms of money, which allows us to keep track of market values in a standardized way.

Statement 2: False.

• Money as a standard of deferred payment is still a significant function, as it allows for future payments to be made.
• Modern economies frequently use money for future payments, such as loans, wages, and other financial transactions involving credit. While we might use credit or contracts, the deferred payment function of money is very much a part of modern economies, such as in mortgage repayments or installment plans.

Information Booster:

Functions of Money:

1. Medium of Exchange:
   Money is widely accepted in exchange for goods and services. It avoids the inefficiencies of the barter system, where both parties must have what the other wants.
2. Unit of Account:
   As explained, money provides a standard unit to measure the value of goods and services.
3. Store of Value:
   Money holds its value over time, allowing individuals to store wealth and make future purchases.
4. Standard of Deferred Payment:
   This function allows money to be used in financial agreements where payments are made in the future. This is crucial for credit systems, loans, and mortgages.