Money

Functions of money

  • Medium of exchange
    • Goods and services can be traded more efficiently using money compared to bartering
    • Allows of specialisation and division of labour
  • Store of Value
    • Money is an Asset whose value can be retrieved in future
    • Transfers purchasing power between time periods
  • Unit of account
    • Allows you to express the value of good in a clear and meaningful way
  • Standard of deferred payment
    • Money must be acceptable and seen as holding its future value

Characteristics of Money

  • Portable
  • Divisible
  • Durable
  • Limited in supply
  • Acceptable to majority
  • Difficult to forge