Business Aura

Generally, money is a widely acceptable item that can be used to purchase goods and services, and to pay off debts. The purpose of money is to aid in the fast and efficient exchange of goods and services. To be able to do so, money performs three specific functions which are as medium of exchange, standard of value, and storage of value.

In institutions that have progressed their trade system from bartering, the population have created an indirect means to obtain products and services. This means involves the exchange of money to purchase goods and services. As a medium of exchange, the process involves these two steps and they just differ in the point of reference. In reference to the buyer, money is given by the buyer to the seller which is equal to the value of the goods or service which is called a purchase. On the other hand, in reference to the seller, money is obtained by the seller from the buyer in exchange of the goods or services he gives the seller and this process is called a sale.

Every product or service available for trade has at least one exchange value. This value is equivalent to the number of units of another commodity that is acceptable to the society in making an exchange. The function of money solves the problem presented by bartering, and makes a purchase and a sale easier.

Money functions as a store of value in such a way that saving for the future is more convenient with it. Think about if money did not exist, saving for the future means stocking up piles of goods which may end up into spoilage. Money provided a more stable means to save for the future.