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.