Identify and explain the three main characteristics and uses of money.
The three main characteristics and uses of money are:
1. Medium of exchange: Money serves as a medium of exchange, meaning that it is used to buy and sell goods and services. Instead of bartering with goods or services, people use money as a universally accepted form of payment. This allows for transactions to occur more easily and efficiently.
2. Store of value: Money serves as a store of value, which means that it can be saved and used later. It allows people to accumulate wealth and save for future needs, like retirement or emergencies. Money is also durable, portable, and easily divisible, making it a convenient store of value.
3. Unit of account: Money serves as a unit of account, meaning that it provides a common measure of the value of goods and services. Prices are expressed in terms of a currency, allowing for easier comparison of prices and for the calculation of profits and losses. A unit of account facilitates economic decision-making and helps to promote efficient resource allocation.
Overall, money is a key tool in modern economies, providing a means of exchange, a store of value, and a unit of account that supports economic growth and development.