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                                              Three Functions of Money

1. A MEDIUM OF EXCHANGE - Money is used in place of barter. It allows individuals to buy goods and services without having to provide an equivalent good or service other than the money.
2. A MEASURE OF VALUE - Money gives the buyer and seller a mutual basis to indicate the value of a good or service.
3. A STORE OF VALUE - Money holds purchasing power over time. Individuals save money in anticipation of future use. Money allows the convenience of being stored in various forms in lieu of immediate consumption.

 

CLASSROOM ACTIVITIES: DESCRIBE WHAT MIGHT BE USED IN BARTER. WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF USING THE BARTER ITEMS DESCRIBED? WHY IS MONEY BETTER TO USE? WHAT FORMS CAN MONEY TAKE? WHAT GOES ON AT YARD SALE OR FLEA MARKET? THIS ACTIVITY IS RELATED TO WHAT FUNCTION OF MONEY. DESCRIBE WHY PEOPLE (YOU) SAVE.