Which of the following is considered the PRINCIPAL role of money?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Facilitation of exchanges
Money removes the need for barter. Helping people exchange goods is its principal role. Unit of account and store of value are its other, later functions.
NCERT (2026-27): “Thus, to smoothen the transaction, an intermediate good is necessary which is acceptable to both parties. Such a good is called money. The individuals can then sell their produces for money and use this money to purchase the commodities they need. Though facilitation of exchanges is considered to be the principal role of money, it serves other purposes as well. Following are the main functions of money in a modern economy.” |