Importance of Money as a Medium of Exchange, Store of Value and Unit of Account

Running head: ECONOMICS ASSIGNMENT
Economics Assignment
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1ECONOMICS ASSIGNMENT
Introduction
The concept of money is difficult to define in real terms. Money in common terms is
defined as anything that serves as a medium of exchange. The definition of money mostly
considers main functions of money as a starting point. Money then is defined in terms of what
money does (Keynes 2018). There are four primary functions of money – medium of exchange,
measures of value, unit of account and as a store. The essay demonstrates arguments in favors of
three of the common functions of money in reference to the three given quotes.
Medium of exchange
Use of money as a medium of exchange is the most common function of money. Use of
money came into effect in order to eliminate the inconvenience in the exchange through barter
system. Money is a more convenient means of exchange as it can differentiate the act of
purchasing from that of selling. After introduction of money, people uses money to exchange
goods and services. Money acts as a medium payment medium. Without serving as a mean of
exchange money by itself has no usefulness. Money facilitates the process of exchange. The easy
exchange results in specialization (Moor 2018). A good system of monetary framework thus has
an enormous utility in modern society. Money is often termed as an option for bearer as it offers
freedom of choice buy from those offering best deal of bargain.
As a medium of exchange money has immense importance. Followed by the first quote
of Marx and Engel from “The Communist Manifesto”, the bourgeoisie class focused on
accomplishing their self-interest. In this society people had left with no other option but to rely
on system of cash payment (Starr 2014). The dominance of bourgeoisie resulted from the higher