Meaning of Money
Money (money supply)—anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Wealth—the total collection of pieces of property that serve to store value
Income—flow of earnings per unit of time
Functions of Money
Medium of Exchange—promotes economic efficiency by minimizing the time spent in exchanging goods and services
Must be easily standardized
Must be widely accepted
Must be divisible
Must be easy to carry
Must not deteriorate quickly
Unit of Account—used to measure value in the economy
Store of Value—used to save purchasing power; most liquid of all assets but loses value during inflation
Evolution of the Payments System
Commodity Money
Fiat Money
Checks
Electronic Payment
E-Money
