Anything that serves the three basic functions. Money

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Money Exchanged for goods and services Currency Paper- based Not coins Note Because “Federal Reserve Note” is at the top of the face The term “note is a formal term that we interchang e with the term “bill” Other Terms Copyright © Texas Education Agency, All rights reserved 3

Can be used to buy good and services Medium of exchange Keeps its purchasing power over time Store of Value Tells you how much different goods and service are worth Unit of account Copyright © Texas Education Agency, All rights reserved Functions of Money 4

...based on the “Functions of Money” criteria... What else could serve effectively as money? Copyright © Texas Education Agency, All rights reserved 5

Take a closer look... at the 3 functions of MONEY Copyright © Texas Education Agency, All rights reserved 6

Medium of Exchange: Copyright © Texas Education Agency, All rights reserved 7

Store of Value It keeps its purchasing power over time. People expect to be able to hold money and use it in the future. Copyright © Texas Education Agency, All rights reserved 8

Unit of Account How much goods and services are worth. In the United States, prices are recorded in dollars and cents Copyright © Texas Education Agency, All rights reserved 9

Bananas? Copyright © Texas Education Agency, All rights reserved 10

SEASHELLS? Copyright © Texas Education Agency, All rights reserved 11

Cows? Copyright © Texas Education Agency, All rights reserved 12

Plastic Coins? Copyright © Texas Education Agency, All rights reserved 13

Flash from the past... These WERE used as money Copyright © Texas Education Agency, All rights reserved 14