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Dec 7, 2023
The primary functions of money in Kenya, as in any other country, are:
1. Medium of exchange: Money serves as a widely accepted medium of exchange for goods and services. It eliminates the need for barter, where goods are directly exchanged for other goods, making transactions more convenient and efficient.
2. Unit of account: Money provides a common unit of measurement for the value of goods and services. It allows individuals and businesses to compare and determine the relative worth of different products and make informed decisions.
3. Store of value: Money acts as a store of value, allowing individuals to save and accumulate wealth over time. It provides a means to store purchasing power for future use, enabling people to save for emergencies, investments, or long-term goals.
4. Standard of deferred payment: Money allows for the settlement of debts and obligations over time. It provides a mechanism for individuals and businesses to make payments in the present with the promise of future repayment, such as loans, mortgages, or credit purchases.
5. Measure of wealth: Money serves as a measure of wealth and economic well-being. It helps in assessing the overall economic growth and development of a country by measuring the total value of goods and services produced, known as Gross Domestic Product (GDP).
In Kenya, money plays a crucial role in facilitating economic activities, promoting trade, and enabling individuals and businesses to conduct transactions efficiently. It provides a stable and standardized medium for exchange, contributing to the overall economic stability and development of the country.
1. Medium of exchange: Money serves as a widely accepted medium of exchange for goods and services. It eliminates the need for barter, where goods are directly exchanged for other goods, making transactions more convenient and efficient.
2. Unit of account: Money provides a common unit of measurement for the value of goods and services. It allows individuals and businesses to compare and determine the relative worth of different products and make informed decisions.
3. Store of value: Money acts as a store of value, allowing individuals to save and accumulate wealth over time. It provides a means to store purchasing power for future use, enabling people to save for emergencies, investments, or long-term goals.
4. Standard of deferred payment: Money allows for the settlement of debts and obligations over time. It provides a mechanism for individuals and businesses to make payments in the present with the promise of future repayment, such as loans, mortgages, or credit purchases.
5. Measure of wealth: Money serves as a measure of wealth and economic well-being. It helps in assessing the overall economic growth and development of a country by measuring the total value of goods and services produced, known as Gross Domestic Product (GDP).
In Kenya, money plays a crucial role in facilitating economic activities, promoting trade, and enabling individuals and businesses to conduct transactions efficiently. It provides a stable and standardized medium for exchange, contributing to the overall economic stability and development of the country.
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