On the other hand, when the exchange value of a good is expressed in terms of money, it is known as price. So price is a measure of the exchange value of a commodity. As we know money acts as a medium of exchange.
Money facilitates trade and exchange. It is not only easier but also convenient to express the exchange value of any commodity or service in terms of money.
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It is told that there may not be a general rise or fall in value while there may be a general rise or fall in price. If price rises uniformly covering all goods at a given rate still than the value of a commodity may not change.
We are in a money economy with commodity to money and from money to commodity (that is C-M-C exchange system). So it is convenient to express each and every commodity in terms of money. We also tell that the purchasing power of money is the value of money. We can give an example in this connection.
One pen is sold at Rs. 5/-. So the value of Rs. 5/- is one pen. If 5 pencils are sold at Rs. 5/-, then the price of 1 pencil = Re 1/-. So value of 1 pencil = l/5th of a pen. If value of pen increases then more pencils would be available.
It means the value of the pencil goes down. So the value of both the commodities cannot move at a time. It is, therefore, a fact that the value of money declines, with the rise in price. So value and price are inversely related.