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    which one of the following is known as contingent function of money

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    Which of the following is a contingent function of money?

    Which of the following is a contingent function of money?

    Byju's Answer Standard XI Statistics

    Study of Distribution

    Which of the ... Question

    Which of the following is a contingent function of money?

    A Transfer of value B Medium of exchange C

    Assisting consumption decisions

    D

    Standard of deferred payment

    Open in App Solution

    The correct option is C

    Assisting consumption decisions

    The functions performed by money in assisting various economic agents such as consumers, producers, etc., in making economic decisions are called contingent functions of money. The money income of the consumer and the money-prices of the commodities influence the consumption decisions of different individuals.

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    SIMILAR QUESTIONS

    Q.

    The functions performed by money in assisting various economic agents in making economic decisions are called

    Q.

    Money as a standard for deferred payments has led to the emergence of:

    Q.

    As a standard of deferred payment, money:

    Q.

    Reena a bought a house. While valuing her house, her grandmother valued it in terms of buffalo and carts.

    What is the problem that is being faced in the valuation process?

    (a) Lack of double coincidence of wants

    (b) Lack of store of value

    (c) Absence of a common unit of value

    (d) Lack of standard for deferred payment

    Q.

    Read the following dialogue between Neeta and Sita:

    Neeta: I want to shift to Singapore. What do I do with my house?

    Sita: I can give you '10 antique pieces' for it.

    Neeta: But, I do not need antique pieces.

    Sita: Then, let the house remain where it is.

    Which of the following problems is being faced by Neeta and Sita in their exchange process?

    (a) Lack of medium of exchange

    (b) Lack of transfer of value

    (c) Lack of store of value

    (d) Lack of standard for deferred payment

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    Study of Distribution

    Standard XI Statistics

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    Answer the following question.What are the contingent functions of money?

    Click here👆to get an answer to your question ✍️ Answer the following question.What are the contingent functions of money?

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    Question

    What are the contingent functions of money?

    Medium Open in App Solution Verified by Toppr

    Money refers to a common medium of exchange that is issued under the law of government and acts as a legal tender for the whole country. The contingent functions of money includes the following :-

    1. Distribution of national income: Money helps in optimum distribution of national income among different factors of production by generating factor incomes like rent, interest, wage and profit.

    2. Basis of credit creation: Credit creation by commercial banks is not possible without money. Money as a store of value has encouraged savings by people in the form of demand deposits in the banks which are used by the commercial banks to create credit.

    3. Maximization of satisfaction: Money helps the consumers and producers in maximizing their satisfaction by measuring the value of everything in terms of money. A consumer derives maximum satisfaction by equating the price (expressed in terms of money) of each commodity with its marginal utility (satisfaction). Similarly, a producer maximizes his satisfaction (profit) by equating the marginal productivity of a factor with price of such factor.

    4. Increases productivity of assets: Money increases the productivity of capital as it is the most liquid asset and can be put to alternative uses. Due to liquidity of money, capital can be easily transferred from less productive uses to more productive uses.

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    Contingent Functions of Money in Economics

    ADVERTISEMENTS: Some of the contingent functions of money in economics are as follows: (i) Distribution of National Income (ii) Maximization of Satisfaction (iii) Basis of Credit Creation (iv) Productivity of Capital (v) Bearer of Options and (vi) Guarantee of Solvency. (i) Distribution of National Income: Money helps in optimum distribution of national income among different […]

    Contingent Functions of Money in Economics

    Article shared by : ADVERTISEMENTS:

    Some of the contingent functions of money in economics are as follows: (i) Distribution of National Income (ii) Maximization of Satisfaction (iii) Basis of Credit Creation (iv) Productivity of Capital (v) Bearer of Options and (vi) Guarantee of Solvency.

    (i) Distribution of National Income:

    Money helps in optimum distribution of national income among different factors of production (land, labor, capital and enterprise).

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    Total output of the country is jointly produced by these factors. So, the output should be distributed among them. Money helps in distribution of the national product in the form of rent, wage, interest and profit, which are expressed in money terms.

    (ii) Maximization of Satisfaction:

    Money helps the consumers and producers in maximizing their satisfaction. A consumer derives maximum satisfaction by equating the price (expressed in terms of money) of each commodity with its marginal utility (satisfaction). Similarly, a producer maximises his satisfaction (profit) by equating the marginal productivity of a factor with price of such factor.

    (iii) Basis of Credit Creation:

    Credit creation by commercial banks was not possible until money was introduced. Money as a store of value has encouraged savings by people in the form of demand deposits in banks. Such demand deposits are used by the commercial banks to create credit. ‘

    (iv) Productivity of Capital:

    Money increases the productivity of capital as it is the most liquid asset and can be put to any use. Due to liquidity of money, capital can be easily transferred from less productive uses to more productive uses.

    (v) Bearer of Options:

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    Money provides purchasing power in the hands of the person (bearer) holding it and he has numerous options for its use. The bearer can change his decision regarding use of money from time-to-time and place-to- place depending upon urgency, intensity and his priority.

    (vi) Guarantee of Solvency:

    Money serves as a guarantee of solvency for an individual or institution. If an individual has enough money (more than his liabilities), then he cannot be declared insolvent or bankrupt. Due to this reason, individuals and firms keep large amount of money to meet unexpected needs.

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