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Question
Distinguish between
Primary functions of money and Secondary functions of money.
Solution
| Basis of difference | Primary functions of money | Secondary functions of money |
| 1. Definition | Primary functions of money are those functions for which it was developed. | Secondary functions of money are those functions that money performs besides its primary functions. |
| 2. Functions | Primary functions of money are medium of exchange and measure of value. | Secondary functions of money are standard of deferred payment, store of value and transfer of value. |
| 3. Solves problem of | These functions solve the problem of double coincidence of wants. | These functions solve the problem related to borrowing and lending. |
| 4. Leads to | It leads to increase in trade operations in the society. | It leads to increase in credit creation and evolution of financial institutions. |
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