Yes, I do agree with the statement. Money performs a number of functions in today’s economy.
They are as follows:
Medium of Exchange: It serves as a medium of exchange, i.e. any commodity can be purchased or sold for money.
The measure of Value: Money helps to compare the price of commodities in the modern economy, which was not possible during the Barter period. Value of commodity can be expressed in different currencies like Rupee in India, Dollar in the U.S.A., etc.
Standard of deferred payment: Deferred payment means making payment at a future date. This was not possible in a barter economy, because taking loans was easy, but its repayment was difficult as the loan was in form of grains, cattle, etc.
Store of value: Money made possible the habit of saving for the future. Saving was not possible during the barter economy as commodities started deteriorating after a certain period of time. But with the invention of money, now it can be saved for a longer period.
Transfer of value: Transfer of money from one person to another and from one place to another place, became possible due to the invention of money.
Contingent Functions: Besides the above functions of money, there are other functions of money, like
- it helps to measure National Income.
- it forms the basis of credit.
- it imparts liquidity to wealth.
- it helps to estimate macroeconomic variables.