Functions of Money

• Medium of Exchange — Money can be used for buying and selling goods and services. Money allows society to avoid the difficulties associated with barter.
• Unit of Account — Money can be used to judge the relative value of different goods and services. Money assists consumers and producers in making informed decisions.
• Store of Value — Money can be used to transfer purchasing power from the present into the future.

Characteristics of Money

• Divisible — Can be broken into smaller units.
• Relatively scarce — Not as much available as everyone wants.
• Durable — Should last a long time.
• Portable — Easy to carry.
• Desirable — Something people want.
• Distinguishable — Easy to recognize and hard to fake.