2nd October 2019

shmoop
13

What is money in the economy?

We all know what money is. Economists, however, have a language all their own when it comes to money. They define it as something that serves as a medium of exchange, a unit of accounting, and a store of value. Money is a medium of exchange in the sense that we all agree to accept it in making transactions.

Similarly, you may ask, what is the role of money in the economy?

Money performs many functions in a modern economy. Thus, money is a medium of exchange, a measure of value, a store of value, and a standard of deferred payments. Medium of exchange: The most important function of money is that it acts as a medium of exchange. Money is accepted freely in exchange for all other goods.

What purpose does money serve in an economy?

Money is often defined in terms of the three functions or services that it provides. Money serves as a medium of exchange, as a store of value, and as a unit of account. Medium of exchange. Money's most important function is as a medium of exchange to facilitate transactions.

What is considered to be money?

Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context. Any item or verifiable record that fulfills these functions can be considered as money.
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