A Study of the Role of Money in Economy

By the role of money, I mean the part it plays in our modern economy.

Money is regarded as the pulse of our life. Without money, there is no life or activity in this modern economy. 

Everything is related to money here. From morning to evening, from birth to death, you need money for this or that.

Money plays an important role in our economy. It motivates and influences all our economic activities; consumption, production, supply, demand, and distribution are all influenced by the supply and power of money in any economy.

• As a consumer, you can purchase goods and services and make payments in money, which is universally accepted. 
• As a unit of exchange and as a measure of value, money guarantees the real value of all your goods and services.
• Thus, money gets generated and circulated through our activities.
• To be able to pay in money, you need to earn money. So, you will be earning money by doing some business or other, working as an employee in a company, or doing some labor. Money is earned through our occupations.
• Money facilitates economic activity, creating businesses in the manufacturing and services sectors and thereby creating more jobs for more people across different fields. This, in turn, boosts the economy. 
• Money further facilitates and ensures that goods and services are produced to meet the demands of consumers. Consumers can opt for better products by choosing from multiple options, as they are free to buy as and when they desire to do so. This is possible because of the storage value of money.
• Money facilitates the easy transfer and distribution of goods and services to any corner of the world, as you can make payments through money.
• Money plays another important role in equalizing the marginal utilities of consumers. Consumers are able to shift toward higher-utility goods by discarding lower-marginal-utility products, as they can distinguish differences in utility with the help of money as a standard of value, which sets the prices of goods in terms of money.
• So, money facilitates rational distribution of income earned by consumers among different needs and necessities. The buyer can draw a picture of his income and expenses and match them with utmost utility levels within the given income.
• Money, as a standard of value, makes the maintenance of accounts very easy, as everything is accounted for in terms of money. This facilitates accurate calculation of expenses and income for any business and aids in the fixation of the prices of their products.
• Money helps governments to calculate and collect their taxes and plan their projects, estimate their revenue, and prepare Budgets accordingly, thereby enabling them to boost their economy.
• Further, money enables a continuous flow of funds from one person to another and from one corner of the world to the other.

To sum up, money has different roles in our economy. 

It acts as the power of purchase. 

It serves as a store of value. 

It facilitates a continuous flow of economic activities.

It boosts businesses and trade internationally. 

It helps in the distribution of wealth. 

It aids in the progress of the economy as a whole.