An Introduction to Money
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Prior to the creation of money, individuals and firms had to accept other goods or services as payment or be self-sufficient by producing everything required
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Often lacking self-sufficiency or driven by the desire for a wider range of goods/services, bartering became the norm, but it too had problems
- As individuals and firms trade with each other in order to acquire goods or raw materials, they require a means of exchange that is acceptable and easy to use
- Modern currency fulfils this purpose, and money functions as a medium of exchange, a measure of value, a store of value, and a method of deferred payment
The four Functions of Money
A Medium of Exchange |
A Measure of Value |
A Store of Value |
A Method of Deferred Payment |
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