# Money Defined Elements defining what we recognize as 'money' ## Medium of Exchange - **Definition:** Can be used to intermediate the exchange of goods and services. - **Use:** A common ground for determining value. - **Example:** A community uses beaver pelts as a medium to trade for other goods. ## Unit of Account - **Definition:** A standard numerical unit of measurement of market value for goods, services, and other transactions. - **Use:** Can be used to compare goods using a common system. - **Example:** Housing prices in Japan can be compared using the yen as a unit of account. - ## Store of Value - **Definition:** Maintains its value over time. - **Use:** Can be spent or exchanged at a later date without penalty. - **Example:** An ounce of gold could buy a toga in Roman times, yet it can still buy a nice suit today. ### Divisible Can be divided into smaller units of value. ### Fungible One unit is viewed as interchangeable with another. ### Portable Individuals can carry money with them and transfer it to others. ### Durable An item must be able to withstand being used repeatedly. ### Acceptable Everyone must be able to use the money for transactions. ### Uniform All versions of the same denomination must have the same purchasing power. ### Limited in Supply The supply of money in circulation ensures values remain relatively constant. ##### Relevant Tags > #money