Glossary Terms:

What Is Money? Why Does It Have Value?

Glossary terms from:
http://www.econedlink.org/e750


Benefit

Monetary or non-monetary gain received because of an action taken or a decision made.

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.

Coins

Government-issued pieces of metal that have value and are used as money.

Costs

An amount that must be paid or spent to buy or obtain something. The effort, loss or sacrifice necessary to achieve or obtain something.

Currency

The money in circulation in any country.

Definition of Money

A medium of exchange which can be conveniently circulated and is seen as an effective form of currency.

Exchange

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

Functions of Money

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

Goods

Tangible objects that satisfy economic wants.

Money

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.

Purchasing Power

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

Services

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

Specialization

A situation in which people produce a narrower range of goods and services than they consume. Specialization increases productivity; it also requires trade and increases interdependence.

Trade

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

Transaction Costs

Costs associated with buying or selling goods and services that are not included in the money prices of those goods and services. Examples include obtaining information on prices and product quality, searching for sellers, and bargaining costs.

Value of Money

The ability of money to buy goods and services. A wide variety of items has been used as money. Money need not have any intrinsic value. It is people's willingness to accept it that gives it value.

Work

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.