Macroeconomics, 2nd Edition by Pearson

6.1

Money, Bonds, and Private Wealth

Macroeconomists get around the problem of specifying what money is by

describing instead what properties something must have to be called money.

The three major functions of money are (1) as a medium of exchange, (2) a unit

of accounting, and (3) a store of value.

In a barter economy with no money, trading takes the form of the direct

exchange of goods. However, finding someone who has the good you want and

is moreover willing to exchange it for something you have can be very time

consuming. Money makes searching for a trading partner unnecessary. By

operating as a

MEDIUM

OF

EXCHANGE

—a device ...