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9.4 Money and Banking
Homearrow_rightRevision Notes arrow_right A Level arrow_right The Macroeconomy arrow_right Money And Banking
9.4.1 Money
Definition: Money is anything that is generally acceptable as a means of payment for goods and services and in settlement of debts.
Functions of moneyMeaning
Medium of exchangeAccepted in exchange for goods and services; removes the need for a double coincidence of wants (barter)
Store of valueCan be saved and used to buy goods in the future (weakened by inflation)
Unit of account (measure of value)Prices of goods are expressed in money, making comparison possible
Standard of deferred paymentDebts and future payments are agreed in money terms (loans, salaries, contracts)

Characteristics of money: acceptability, durability, portability, divisibility, homogeneity (uniformity), scarcity / limited supply, difficult to counterfeit (recognisability), stability of value.

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