Money

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Money

Money (pronunciation: /ˈmʌni/) is a medium of exchange in the form of coins and banknotes, used to facilitate transactions of goods and services.

Etymology

The term "money" is derived from the Latin word "moneta", which was the surname of the Roman goddess Juno, in whose temple money was minted.

Definition

Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The main functions of money are distinguished as: a medium of exchange, a unit of account, a store of value and sometimes, a standard of deferred payment.

Types of Money

There are three types of money: commodity money, representative money, and fiat money.

  • Commodity Money refers to objects that have value in themselves as well as for use as money.
  • Representative Money is money that consists of token coins, paper money or other physical tokens such as certificates, that can be reliably exchanged for a fixed quantity of a commodity such as gold or silver.
  • Fiat Money is a type of money, which is not convertible by law to any other thing, and is declared by the government to be accepted as a means of payment.

Related Terms

  • Currency - a system of money in general use in a particular country.
  • Banknote - a type of negotiable instrument known as a promissory note, made by a bank, payable to the bearer on demand.
  • Coin - a small, flat, round piece of metal or plastic used primarily as a medium of exchange or legal tender.
  • Economics - the branch of knowledge concerned with the production, consumption, and transfer of wealth.
  • Finance - the management of large amounts of money, especially by governments or large companies.

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