• Money – a commodity that is accepted as a means of payment
• Means of payment is a way of setting a debt
• 3 Main Functions
o Medium of exchange – is any object that is accepted in exchange for
goods and services. If goods and services are exchanged for other goods
and services – it is called a barter- which requires a double coincidence of
wants, exchange a burger for a CD you have- you need someone who is
selling the burger and wants the CD in exchange. A medium of exchange
overcomes that issue.
o Unit of account – Is an agreed measure for stating the prices of goods and
services eg. In dollars and cents.
o Store of value – Money is a store of value - that it can be held and
exchanged later for goods and services just like a car, house are other
examples. Inflation lowers the value of money and the value of other
commodities – to make money useful