Money

Money is a widely accepted medium of exchange that also serves as a unit of account and store of value. Its forms and institutions vary across societies.

Medium of exchange: An item or system widely accepted in payment for goods and services. Money’s exchange function lets trades proceed without matching each buyer’s goods to a seller’s wants.
Commodity money: Money whose value is linked to a commodity that has uses or value apart from payment. It illustrates how an object can function as money through both market value and acceptance.
David Graeber: An anthropologist whose work examined debt, money, and the history of economic institutions. His account challenged the familiar story that money arose simply to solve barter’s inconveniences.
Inflation: A sustained increase in the general price level that reduces the purchasing power of money. Inflation changes how much a monetary unit can buy over time.
Unit of account: A standard measure used to express prices, debts, and other economic values. Money gives diverse goods and obligations a common scale for comparison.
Fiat money: Money that is not redeemable for a commodity and derives its monetary status from law and social acceptance. Modern national currencies commonly rely on public authority and confidence rather than commodity redemption.
Adam Smith: An eighteenth-century Scottish political economist known for The Wealth of Nations. Smith gave the influential account of money emerging from difficulties in direct exchange.
Monetary policy: Actions by a central bank to influence monetary conditions, credit, and economic activity. Policy decisions affect the supply and cost of money across an economy.
Store of value: An asset that preserves purchasing power for use at a later time. Money can transfer the ability to buy from the present into the future.
Bank money: Transferable deposits held at banks that are used to make payments. Much everyday money consists of bank liabilities rather than physical notes.

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