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What is Money ?



Money is any object or record, that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context.

The money supply of a country consists of currency (banknotes and coins) and bank deposits or 'bank money' (the balance held in checking accounts and savings accounts).

Bank deposits usually form the larger part of the money supply of a country.

The economic definition emphasizes that money is the medium of exchange, or what we use to buy things with.

The invention of money makes trading easier.

With money, all prices can be expressed in the same way, in terms of how much money is needed to buy the product.

The unit of money becomes the measuring stick of value, or what economists call the standard of value.

With a standard of value, computing the costs and benefits of various options, that is, making choices, becomes easier.

A standard of value is most useful when it does not change over time. If the measuring stick changes with time, comparing costs and benefits of some options may be more difficult.

Inflation or deflation change the measuring stick, and a reason people dislike inflation is that it makes comparing options over time more difficult.


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