Search results
Money functions as a medium of exchange, allowing individuals to trade goods and services with one another. It also serves as a store of value, allowing people to save wealth over time. Lastly, it functions as a unit of value, enabling people to compare the worth of different items. Created by Grant Sanderson.
- 6 min
- Grant Sanderson
Jan 3, 2023 · Apart from its function as a medium of exchange, money also serves as a store of value and a unit of account. Everything that fulfills these three functions can be considered money. Anything can be money, as long as it fulfills the three functions of money: 1. medium of exchange, 2. store of value, and 3. unit of account.
Feb 24, 2006 · In other words, money is defined by the functions it serves in the economy. In fact, while money has taken many forms over the ages—cowry shells, furs, beads, even large stone wheels—useful forms of money share three basic functions. First, money is a store of value, which means that it holds its value over time. You can put money in a ...
Because money serves three basic functions. Money is the following: A medium of exchange. A measure of value. A store of value. Figure 13.1. Money itself has no intrinsic value. 401 (K) 2012 – Money – CC BY-SA 2.0. To get a better idea of the role of money in a modern economy, let’s imagine a system in which there is no money.
Key Takeaways. Money is anything that serves as a medium of exchange. Other functions of money are to serve as a unit of account and as a store of value. Money may or may not have intrinsic value. Commodity money has intrinsic value because it has other uses besides being a medium of exchange.
The value of the money must also remain stable over time. Some have argued that inflation, by reducing the value of money, diminishes the ability of the money to function as a store of value. [failed verification] Properties. The functions of money are that it is a medium of exchange, a unit of account, and a store of value.
Feb 13, 2024 · A store of value refers to an asset, currency, or commodity that either maintains or slightly increases its value over time. Examples of good stores of value include currencies, precious metals & gems, and cryptocurrencies. Poor stores of value include bonds, cash (subject to inflation), commodities like oil (affected by market dynamics), and ...
