Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. It is a medium of exchange that allows people and businesses to obtain what they need to live and thrive. Money serves three basic functions: it is a medium of exchange, a unit of account, and a store of value. The primary functions that distinguish money are:
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Medium of exchange: Money is anything that serves as a medium of exchange, which is widely accepted as a means of payment. It allows people to trade goods and services without the need for bartering.
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Unit of account: Money is a socially accepted standard unit with which things are priced. It is used to measure the value of goods and services, making it easier to compare prices and determine the relative worth of different items.
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Store of value: Money can be stored and used at a later time. It allows people to save their wealth and use it when needed, rather than having to spend it immediately.
Money can take many forms, including physical currency, bank deposits, and digital currencies. Its value is derived by social convention, having been declared by a government or regulatory entity to be legal tender. Ultimately, money is defined by people and what they do, and when people use something as a medium of exchange, it becomes money.
