Glossary Terms:

Why do we need money? Think about Ebay!

Glossary terms from:


Trading a good or service directly for another good or service, without using money or credit.

Characteristics of Money

Characteristics of money include it being durable (both physically and socially), divisible (money can be divided into increments appropriate for the cost of an item), transportable (literally meaning that money must be easy to move), and the ability to regulate the amount of money in a market by making it uncounterfeitable.


The money in circulation in any country.


Trading a good or service for another good or service, or for money.

Exchange Rate

The price of one nation's currency in terms of another nation's currency.

Functions of Money

Money functions as a medium of exchange, a store of value, and also a unit of account.


Tangible objects that satisfy economic wants.


Money paid regularly, at a particular rate, for the use of borrowed money.


Places, institutions or technological arrangements where or by means of which goods or services are exchanged. Also, the set of all sale and purchase transactions that affect the price of some good or service.


Anything that is generally accepted as final payment for goods and services; serves as a medium of exchange, a store of value and a standard of value. Characteristics of money are portability, stability in value, uniformity, durability and acceptance.


A good or service that can be used to satisfy a want.


In a credit arrangement, the total amount spent during the billing cycle.

Purchasing Power

The amount of goods and services that a monetary unit of income can buy.


Earnings from an investment, usually expressed as an annual percentage.


An exchange of goods or services for money.


Activities performed by people, firms or government agencies to satisfy economic wants.


The exchange of goods and services for money or other goods and services.


Desires that can be satisfied by consuming or using a good or service. Economists do not differentiate between wants and needs.


Effort applied to achieve a purpose or result, often for pay; skills and knowledge put to use to get something done; employment at a job or in a position; occupation, profession, business, trade, craft, etc.