Money

Unit of account

• Money services as the common base of comparison that people use to present prices and record debts.
• Money provides a measure by which we can value different goods and services.

Means of exchange

• We use notes and coins as money, rather than barter as a medium of exchange. 
• Money enables goods and services to be exchanged, transactions to be settled and debts to be paid.
• Money avoids the problems of barter, principally the double coincidence of wants, which is inefficient and would stifle specialisation and division of labor. 

Store of value

• Money acts as a store of value over time.
• It enables individuals to transfer spending to future time periods secure in the knowledge that it will have a future value. 

Legal tender

• Accepted to buy goods and services.
• Money allows individuals to pay for goods and services later, despite their consumption taking place now.
• Money is an accepted medium of exchange it enables credit to be offered so payments can take place at a future date.

Risk averse or risk taker

• Some people are willing to take more risks e.g. gamble or spend all of their money. 
• others will be more cautious and want to save money to ensure security in the future.

• Rewards can be immediate e.g. earning interest on saving a new pair of shoes, or long term e.g. earning interest on saving for a big commitment such as buying a house or care. 

• Borrowing can allow for immediate rewards but will incur a cost as money borrowed will be paid back with interest, whereas saving will see the value of money grow. 

• Some people are willing to take more risks e.g. gamble or spend all of their money. 
• others will be more cautious…