Money has three functions which are unit of account, medium of exchange, and a store of value. Unit of account is the money function in which money is used as the common benchmark to designate the prices of goods and exchange throughout the economy. Unit of account also known as measure of value means that money is the measuring unit for prices. For example a 1 liter bottle of soda costs $2 and a 2 liter bottle of soda costs $3.75. You understand this and are able to compare the prices. Money is used in exchange for the price of goods. Price is how much money is needed to complete the exchange of the goods in interest.
The next function of money is medium of exchange. This function is the function of money being excepted as payment for goods and services. Buyers get their purchased goods by giving money to the seller. The seller receives money for trade of their goods. For example a person wanting a bag of chips gives the seller money for the price of the chips. The seller receives the money in trade for the price of the chips. Money is a material that is commonly accepted as a medium of exchange. This medium of exchange takes place of the past barter system.
The last function of money is store of value. This function means that money can be used to purchase the exact same goods in the future as it can today. Once a person receives a paycheck the money that that person does not spend is place into a savings. By saving money you are able to spend some now and some later which the sense of value is stored.
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