Definition of Money
Money is anything that is generally acceptable as a medium of exchange and in the settlement of debts. Money is anything that is generally acceptable as a means of payment. Money is primarily a medium of exchange or means of exchange. It is a way for a person to trade what he has for what he wants. It is a medium of exchange, a store of value and a unit of account. It is used to pay debts, purchase goods and services and is accepted by the government for taxes.The term medium of exchange is used to describe money’s ability to settle debts and to increase the purchasing power of individuals. Money derives its power and value from being the legal tender that is accepted as a universal method of payment within the boundaries of each country or an economic bloc. Legal Tender laws are enacted to require people to use the government’s money in payment of lawful debts among private citizens. Money supply is the form in which money is available in the economy. It can be in the form of currency or bank money. Currency is described as the physical nature of money supply in an economy. It is grouped into coins and bank notes. Coins were the earliest forms of currency after barter trade and were later followed by notes.
Trade by Barter and its Limitations
Definition: Trade by Barter may be defined as a form of trading in which goods are exchanged directly for other goods without the use of money as a medium of exchange. For example, if someone has garri and is in need of beans, he must locate somebody who has beans and is in need of garri. Trade by Barter has many setbacks.
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