The money allows the exchange of goods and services in an economy in a more simple barter.
Therefore, for a good can be described as money must meet the following three criteria are the three major functions performed by money in a modern economic system :
1. Medium of exchange : to avoid the inefficiencies of a barter system . When a property is required for the sole purpose of using it to be exchanged for other things , has this property . For example, few people retain tickets for collection. Instead , most people keep them for the possibility to exchange whenever they want for other goods. Also, money should be a good light and easy to store and transport .
Two . Unit of account : When the value of an asset is often used to measure and compare the value of other assets or when its value is used to refer debts, said the well has this property . For example , if members of a culture are inclined to measure the value of things in reference to the goats , the goats would be the main unit of account . A horse could cost 10 goats and a cottage about 45 goats. The unit of account means the unit of measure used in an economy to fix prices.
Three . Conservation Value: When an asset is acquired in order to preserve the commercial value for future exchange , then is said to be used as a store of value. In the above example, a goat would have a problem when serving as money, since it is a perishable commodity : eventually dies. Other materials, like gold and silver retain their properties despite the passage of time. It is a means of accumulating or hoarding . Money, as representative of wealth , has the power to purchase any goods and can be stored in any quantity. In other words , the function can only be performed hoarding money full value : gold coins and bullion , precious stones, gold objects , etc. . The choice as a means of accumulation must be always something that can be stored for long periods without deterioration . Money is a store of value but not the only , any asset that maintains its purchasing power over time serve as a store of value.
In addition to the above , the money must be recognized by the society that uses it, allowing identification and assessment in a clear .
Money , as we know it today (currency worthless own ) must be endorsed or certified by the issuing institution. Currently it is governments through laws , who determine what type of legal tender , but are other entities such as central banks ( Central Bank ) and the houses of the coins ( Ceca ) , those dealing , first, to regulate and control monetary policy in an economy, and second , to create notes and coins on demand and the need for physical money .
Therefore, for a good can be described as money must meet the following three criteria are the three major functions performed by money in a modern economic system :
1. Medium of exchange : to avoid the inefficiencies of a barter system . When a property is required for the sole purpose of using it to be exchanged for other things , has this property . For example, few people retain tickets for collection. Instead , most people keep them for the possibility to exchange whenever they want for other goods. Also, money should be a good light and easy to store and transport .
Two . Unit of account : When the value of an asset is often used to measure and compare the value of other assets or when its value is used to refer debts, said the well has this property . For example , if members of a culture are inclined to measure the value of things in reference to the goats , the goats would be the main unit of account . A horse could cost 10 goats and a cottage about 45 goats. The unit of account means the unit of measure used in an economy to fix prices.
Three . Conservation Value: When an asset is acquired in order to preserve the commercial value for future exchange , then is said to be used as a store of value. In the above example, a goat would have a problem when serving as money, since it is a perishable commodity : eventually dies. Other materials, like gold and silver retain their properties despite the passage of time. It is a means of accumulating or hoarding . Money, as representative of wealth , has the power to purchase any goods and can be stored in any quantity. In other words , the function can only be performed hoarding money full value : gold coins and bullion , precious stones, gold objects , etc. . The choice as a means of accumulation must be always something that can be stored for long periods without deterioration . Money is a store of value but not the only , any asset that maintains its purchasing power over time serve as a store of value.
In addition to the above , the money must be recognized by the society that uses it, allowing identification and assessment in a clear .
Money , as we know it today (currency worthless own ) must be endorsed or certified by the issuing institution. Currently it is governments through laws , who determine what type of legal tender , but are other entities such as central banks ( Central Bank ) and the houses of the coins ( Ceca ) , those dealing , first, to regulate and control monetary policy in an economy, and second , to create notes and coins on demand and the need for physical money .