There are four basic functions of money. First, money
is a medium of exchange. Buyers use a medium of exchange
to compensate sellers in exchange for goods and services. Second,
money is a unit of account. A unit of account is
simplifies the exchange of goods and services
between buyers and sellers by ensuring that they work in the
same pricing units. The third function of money is as a store of
value. A store of value allows the exchange of current consumption for
future consumption. The fourth function of money is as a means to
liquidity. Liquidity describes the ease with which an item can be
traded for something that you want, or into the common currency within
an economy.