Importance Of Money Class 10 | PW (2024)

FAQs

What is the importance of money Class 10? ›

The main function of money in an economic system is to facilitate the exchange of goods and services, i.e., to lessen the time and effect required to carry on trade. Without exchange of goods and services nobody can fulfill all his needs and requirements. Without money, exchange is not easy.

Anything which is accepted as a medium of exchange is called money. Money can be any commodity or item if it is regarded as money by everybody.

Money has capability to buy anything virtually and helps us a lot throughout the life. By taking the importance of the money in our life we should never destroy or waste the money without any purpose. We should not compare the money and love because both are required separately to run a successful life.

Money allows us to meet our basic needs—to buy food and shelter and pay for healthcare. Meeting these needs is essential, and if we don't have enough money to do so, our personal wellbeing and the wellbeing of the community as a whole suffers greatly.

Store of Value: Wealth can be conveniently stored in the form of money. Money can be stored without loss in value. Saving are secured and can be used whenever there is a need. In this way, money acts as a bridge between the present and the future.

Life with money will have success, freedom, choice, security, happiness and many more. Without money, we would be reduced to a barter economy. For every penny we spend in life, we need to think twice about whether it is worth it. Life without money shows us what adjustment is, what scarcity or starving for food is.

The Four Basic Functions of Money

Money serves four basic functions: it is a unit of account, it's a store of value, it is a medium of exchange and finally, it is a standard of deferred payment.

To summarize, money has taken many forms through the ages, but money consistently has three functions: store of value, unit of account, and medium of exchange. Modern economies use fiat money-money that is neither a commodity nor represented or "backed" by a commodity.

Stability. Of all the qualities of good money, stability is probably the most essential one. The value of money cannot change for a long period of time and hence remain stable. If the value of money keeps changing, then it will fail to function as a measure of value and as a standard of deferred payment.

Why is money important for students? Money is important for students to cover educational expenses and daily needs and to develop good financial habits for the future.

Why did money become important? ›

Money is a medium of exchange with a recognized value that was adopted to make it easier for people to trade products and services with one another. The history of money crisscrosses the world as various cultures recognize the need to simplify trade by introducing a single, portable token of value into the process.

In everyday life money is used in following ways: It is used as a medium of exchange and facilitates the buying and selling of goods like car house food clothes etc. It is used as deposits with the banks or to keep it at home like fixed deposits bonds etc.

It is used as a medium of exchange between individuals and entities. It's also a store of value and a unit of account that can measure the value of other goods. Prior to the invention of money, most economies relied on bartering, where individuals would trade the goods they had directly for those that they needed.

The functions of money are that it is a medium of exchange, a unit of account, and a store of value.

The reason that money holds such a power over people is that it provides them with power – to do what they want to do, whatever that may be. Some people feel money gives them a sense of personal worth.

Money provides a safety net, shielding us from the uncertainties of life. It allows us to cover our basic needs—food, shelter, and healthcare—and grants us peace of mind. Knowing that we have the resources to weather unexpected expenses or emergencies contributes significantly to our overall well-being.

A world without money will require an extremely ideal approach as when people are stripped of the incentives of activity, they choose to not participate in the activity. If workers receive no rewards, they will not work. But this will not eradicate any of the human needs crucial to the survival of humanity.

If there were no money, we would be reduced to a barter economy. Every item someone wanted to purchase would have to be exchanged for something that person could provide.