Explanation

Money serves four functions: medium of exchange (accepted payment for goods/services), unit of account (measures value – prices expressed in money), store of value (save purchasing power for future), standard of deferred payment (settle debts).

Without money, barter requires “double coincidence of wants” – finding someone who has what you want AND wants what you have. Money eliminates this problem.

Good money is: durable, portable, divisible, uniform, acceptable, and relatively scarce. Inflation erodes the store of value function. Modern money is largely digital, not physical.