functions of money

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  • price mechanism
    • functions of money
      • medium of exchange
        • money earned from a specialist job can be spent on desired goods
      • store of value
        • people can save for future purchases
      • measure of value
        • people can assess the value of goods
      • means of deferred payment
        • people paying for goods on credit
    • functions of price
      • rationing device
        • market forces ensure demand = supply
      • signalling device
        • signals producers to increase/ decrease supply
      • incentive
        • rewards of profit make firms want to produce goods
    • different markets
      • local
        • farm shops
      • national
      • international
        • wheat/rice
          • national

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