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Definition: Standard of Value
Any particular commodity, which is used to measure or express the value of other commodity is called as a Standard of Value. It is a pre-determined value used for all types of transactions in a particular country or economy. A standard of value lets all business entities to value their products/services at standard prices and hence helps in maintaining stable economy.
Earlier, gold, oil etc. were used as standard of values during trade and such trade were used to be called as barter trade. Even wheat was used as standard of value by farmers. But now every country has its own currency which is standard of value for their economy.
For example, rupee is standard of value in India whereas dollar serves the purpose in US. So when we buy a pen in India, it may be valued at 50 rupees whereas same pen will be valued at $1 in US. An exchange mechanism is maintained for international trade thus valuing rupee in terms of dollar or in any other currency.