Functions of Money Flashcards

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What does the function medium of exchange mean?

Money is accepted as payment for goods and services. It lets people trade without barter.

Money gives a common measure of value. It lets prices be written in pounds so values can be compared.

Money keeps value for later use. You can save it now and spend it in the future.

Money allows people to agree debts now and pay them later. Loans and wages can be set in pounds for the future.

Barter needs both sides to want what the other has at the same time. Money removes this double coincidence of wants.

The amount of money needed to buy a good or service.

If prices rise, each pound buys less, so saved money loses buying power.

Store of value is holding money to spend later. Standard of deferred payment is agreeing a payment now to be made later.