What Is The Value Of Money?

We have discussed earlier that the main role of money is to facilitate exchange. Money is accepted as a media of exchange because it has value. It is held as a store of value because it has value. The value of money has significant importance in the study of economic problems. By value of money is meant its purchasing power, its capacity to command goods in exchange for itself. Money as we know is not needed for its own sake but for the goods and services it can purchase.

If money buys more commodities than it did at same time, we say the value of money is high and if it buys less, the value of money is said to be low. Thus the real value of a unit of money at a given time and place is the quantity of goods and services of all kinds that can be purchased with a unit of money. The value of money varies inversely with the general level prices. When the general prices increase, the value of money falls and when general prices decrease, the value of money rises. In mathematical terms the value of money and the general level of prices are reciprocals of each other.

Money is one of the wonderful invention of man.Money is defined as "anything that is generally accecptable as a mean of exchange and that at the same time acts as a measure and store of value".Value of money is meant its purchasing power and its capacity to command goods in exchange for itself.

The value of money varies inversely with the general level of prices.When the general prices increase,the value of money falls and when general prices decrease, the value of money rises.Money is accepted as a media of exchange because it has value.Money is not needed for its own sake but for the good and services it can purchase.

Talking about Money it is accepted as a media of exchange because it has value. It is held as a store of value because it has value. The value of money therefore has significant in the study of all economic problems. By the value of money is meant its purchasing power its capacity to command goods in exchange for itself.

Money, as we know, is not needed for its own sake but for the goods and services it can purchase. If money buys more commodities than it did at sometime, we say, the value of money is high and if it buys less, the value of money is said to be low. Thus, the real value of a unit of money at a given time and place is the quantity of goods and services of all kinds that can be purchased with a unit of money.

The value of money varies inversely with the general level of prices:
When the general prices increases, the value of money falls and when general prices decrease, the value of money rises. In mathematical terms the value of money and the general level of prices are reciprocals of each other, i.e., if the value of money falls by 10%, there is rise of 10% in the general price level. Similarly, a rise in 10% in the value of purchasing power of money is the same as decline of 10% in general price level.

Money has no value.  It is only a medium of exchange.  The real test in here is how society values your labours and thoughts, and what you value.  Then you make the exchange with currency or money.  Some people value a rare stamp worth thousands, others a trip to Florida.  The money is the same.  It has no value of its own.