What is Money?
Money is a medium of exchange that facilitates transactions by eliminating the need for a barter system. It serves several key functions in an economy:
Medium of Exchange
Money is widely accepted in exchange for goods and services.
Unit of Account
Money provides a common measure for valuing goods and services, allowing for comparison and accounting.
Store of Value
Money can be saved and retrieved in the future, maintaining its value over time.
Standard of Deferred Payment
Money provides a common measure for valuing goods and services, allowing for comparison and accounting.
Money can take various forms, including:
Commodity Money:
Items with intrinsic value, such as gold or silver.
Fiat Money:
Currency that has value because a government maintains it and people have faith in its value, like paper bills and coins.
Digital Money:
Electronic forms of money, including cryptocurrencies like Bitcoin.
Each form of money serves to make economic activities more efficient by providing a consistent and reliable means for conducting transactions.
