Satisfactory Essays
Money is any object that is generally accepted as a payment for goods and services. Money playing an important role in our business trades because it enable us to buy goods and services to satisfied our needs and wants in our life. All types of money should be judge on how well to accomplish the function of money (Morton). The function of money which is includes medium of exchange, unit of account, and store of value and standard of deferred payment. These functions make money to be more durable, exchangeable, and valuable in our business trades.

Medium of exchange in modern economies can be defined as currency. Money performing an important function in the society, people uses money to buy and sell goods exchange for money (Money functions, 2014). Money make transaction become easier, without money, transaction have to be conducted using the barter system. Barter system will only happened in double coincidence of wants, which mean without coincidence of wants between the parties, the trades would be successful. Barter system can be defines as a method of exchanging goods or services without using the money. Everyone is willing to accept money in payment for goods and services. Medium of exchange will make trades become more efficient and traders can spend more time doing production.

The second function of money is unit of account. Unit of account is being used as the common benchmark to measure of the value of goods and services being exchanged (UPADHYAYA, 2012).This function enables both supplier and purchaser of a good to make decisions about how much to supply and how much to purchase. By using barter system it is very difficult to decide as to how much volume of goods should be given in exchange of a given quantity of c...

... middle of paper ...

...cteristics, 2011).If government increase the money supply , it will leads to inflation occur in our country, because if common things are used as money, prices of goods are likely to be very high because common things are easier to obtain. Government playing an important role because they has the responsibility to maintain an adequate money supply to the market based on their monetary policies.

The last characteristic of money is it should be acceptable to all. Acceptability means that everyone must be able to use the money for transactions (money characteristics, 2011).It is convenient if a type of money is accepted worldwide. This characteristics acceptance of money is accepted by the public as the medium of exchange.

In my conclusion, money is important for us because it makes our transactions become more easier and effective. We cannot live without money.
Get Access