​What do the following things have in common: cattle, corn, salt, copper, gold, silver, seashells, stones, and whale teeth?

​At different times and different places, they have all been used as money. Money is anything that people will accept as a payment for goods and services.

​Money performs three important functions. It serves as a medium of exchange, a store of value, and a unit of account.

​As we know, bartering is an inefficient way for people to meet economic needs. By contrast, money is an efficient medium of exchange, or means through which goods and services can be exchanged. It allows precise, flexible pricing of goods and services.

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​A store of value is something that holds its value over time. People do not have to spend their money all at one time. They can spend it in the future. They know it will be accepted whenever they need to make purchases.

​Banks and the Economy

​When customers leave money in a bank, the bank pays the customer for the use of that money in the form of interest. The amount of interest paid is determined by the interest rate, which is usually a percentage of the total amount of money in the customer's account.

​The same thing occurs when a customer borrows money from a bank. You pay the money back with interest. (Additional money as a "thank you" for letting me borrow)

​Money serves as a good unit of account, or yardstick of economic value in exchanges. It allows people to measure the relative costs of goods and services.

​For ex, a $20 t-shirt is worth 2 $10 gift cards, four $5 burritos, or ten $2 bus rides.

​In the United States, the economic value of all goods & services can be measured by the dollar.

​Money Management

​As we've learned, wanted are unlimited and the resources available to meet these wants are limited. For this reason, people and businesses are motivated to save and invest their money. Saving & investing increases their financial resources.

​Saving & investing is a good way to gain assets.

​An asset is something of economic value that a person or company owns.

​Examples: Houses, cars, building etc

​Savings is income not spent on immediate wants. People have many options for saving money. Common options include savings accounts. & stocks.

​Savings accounts are good when the one may be needed soon.

​Another option is investing in stocks. An investment is the use of money today in a way that earns future money or benefits.

​One way to invest is to buy stock or partial ownership in a company. Savers do this in the hopes that the stocks price will rise, then they can sell their stock and make a profit.