Money, the medium of exchange, is used in one half of almost all exchange. Workers exchange labour services for money. We accept money not to consume it directly but because it directly but because it can subsequently be used to buy things we do wish to consume. Money is the medium throungh which. people exchange goods and services. To see that society benefits from a medium of exchange, imagine a barter economy.
A barter has no medium of exchange. Goods are traded directly oor swapped for other goods.
In a barter economy, the seller and the buyer each must want something the other has to offer. Each person is simultaneously a seller and a buyer. In order to see a film, you must hand oveer in exchange a good or service that the cinema maneger wants. There has to be a double coincidence of wants. You have to find a cinema where the manager wants what you have to offer in exchange.
Trading is a very expensive in a barter economy. People must spend a lot of time and effort finding others with whom they can make mutually satisfactory swaps. Since time and effort are scarce resources, a barter economy is wasteful. The use of money - any commodity generally accepted in payment for goods, services, and debts – makes the trading process simlper and more efficient.
The unit of account is the unit in which prices are quoted and accounts are kept.
In Britain, prices are quoted in pound sterling; in France, in French francs. It is usually convenient to use the units in which the medium of exchange is measured as the unit of account as well. However there are exceptions. During the rapid German inflations of 1922-23 when prices in marks were changing very quickly, German shopkeepers found it more convenient to use dollars as the unit of account. Prices were quoted in dollars even though payment was made in marks, the German medium of exchange.
Money is a store of value because it can be used to make purchase in the furure.
To be accepted in exchange, money has to be a store of value. Nobody would accept money as payment for goods supplied today if the money was. going to be worthless when they tried to buy goods with it tomorrow. But money is neither the only necessarily the best store of value. Houses, stamp collections, and interst bearing. Bank ' accounts all serve as stores of value. Since money pays no interest and its real purchasing power is eroded by inflation, there are almost certainly better way to store value.
Finally, money serves as a standard of deferred payment or a unit of account over time. When you borrow, the amount to be repaid next year is measured in pound sterling. Although convenient, this is not essential function of money. UK citizens can get bank loans specifying in dollars the amount that must be repaid next year. Thus the key feature of meney is its use as a medium of exchange. For this, it must act as a store of value as well. And it is usually, though not invariably, convenient to make money the unit of account and standard of deferred payment as well. (Taken from Economics : English for Academic Purposes Series by C. St. J. Yates)
Daftar Pustaka : Suyudi, Ichwan dan Sri Widiati. 1995. Bahasa Inggris 2. Jakarta : Gunadarma.