Solution

Money serves the following primary purposes:

1. Money serves as a means of exchange because it makes it possible to conduct transactions using money as a standard medium. In other words, money facilitates the purchase and sale of products. As an illustration, one person can sell his things to another for money, and that person can then use the money to buy the goods he wants.
2. Unit of value: Money can be used to measure the worth of items. It is a standard method by which we can determine the worth of each and every good. The price of a good is its value in terms of money. 3.Store of value- It means that wealth in the form of money can be conveniently saved for use as a medium of trade in the future. For instance, money can be kept in banks to cover both immediate and future requirements.
4. Standard for deferred payments: Payments can be made with ease using a financial instrument. To put it another way, it is extremely difficult to repay a loan in commodities and services. However, with the development of money, it is now simple to make loan or interest payments. Following are some ways in which money overcomes shortcomings of barter system:
(A) The use of money eliminated the challenge of the double coincidence of wants in the barter system.
(b) The storing of value is made easier by money.
(c) The difficulty of dividing a commodity was eliminated through the use of money.
(d) It took away the medium of exchange's difficulty.
(e) Using money made delayed payments easier.