Money is defined as anything that is acceptable in exchange for goods and services. This has solved all of the past problems of barter (exchange in goods or services without notes and coins). In the past, fur from animals, shells, certain fruits and grains were the main forms of money. Today, in a more modern society, money takes the form of notes, coins, current account balances, postal orders and credit cards.
QUALITIES OF MONEY
Portable – easy to carry.
Acceptable – people must agree to its use
Durable – will last a long time
Durable – will last a long time
Divisible – easily divided into smaller units
FUNCTIONS OF MONEY
Measure of Value – to price the value of goods or services
Medium of Exchange – permits goods and services to be easily sold
or bought
Means of Deferred Payments – allows goods and services to be
bought now and paid for later
Store of Wealth – can be stored for use at a later time
MONEY AND LEGAL TENDER
Legal Tender is money that can be used as an official medium of payment of a debt. Paper currency is the most common form of legal tender. Coins are also considered legal tender but only up to certain amounts. Chequesare not legal tender; they can legally be refused by creditors as a form of debt settlement.
