| What is money? | | | | different object. For example if goats is the trusted |
| In today's article you will learn what money is. | | | | "object" for the exchange, then instead of that motor |
| In today's world we all use money on a day to day | | | | car having a market value of £2000 it could be |
| basis. Have you ever stopped to think what money in | | | | worth 100 goats! |
| fact is? | | | | - It is a store of value |
| - Money is a source of exchange | | | | - Money is not real |
| - It has a unit of account | | | | The third point is money must be a store of value. |
| Money is a source of exchange. | | | | The "object" must have a market value that can be |
| All throughout history there has been an exchange | | | | stored for future use. |
| system in place. One example is Rome back in 550 | | | | For example, a man who sells lap tops has in his |
| B.C.E, salt was exchanged for goods. | | | | possession one hundred lap tops which he can sell for |
| Originally a conch shell, which is a marine mollusc with | | | | future trade. This is beneficial for him because he has |
| a large brightly coloured spiral, was used in exchange | | | | a store of market value, when he sells the lap tops he |
| for goods. | | | | will add value to his business and himself. |
| Here is the point. | | | | Maybe you keep a cash box at home. The currency in |
| Any object can be used in exchange for goods. When | | | | the box holds market value and can be used in a |
| this object is used to trade goods, it is a medium of | | | | future date. The currency is a store of value. |
| exchange. When trust is built up in this object it leads it | | | | Is money real? |
| to become important and valued. It then becomes a | | | | Here's the thing, money is not real. Why is this fact? |
| "money system". | | | | We have already discussed that money systems are |
| What about the object we use today? | | | | only "objects" which are trusted and accepted. |
| As we have just said, salt was exchanged for goods; | | | | If you lived in a culture where goats were the "object |
| today we use coins and notes. | | | | of exchange" would you view them as real money? |
| These coins and notes are recognised "objects" which | | | | Money is the body of value. This value is decided |
| are accepted in society and trusted. | | | | within ourselves. For example, take two people. |
| This leads on to the second point. | | | | One man loves the old silent movies the other man |
| Money is a unit of account. | | | | does not. They are both offered an original silent |
| What does this mean? | | | | movie film. The film buff is so excited at the thought of |
| It is how the "object" is measured or valued- It is what | | | | owning this film he offers £1000 to buy it. The |
| it is worth. | | | | other man offers £10 because he does not hold |
| For example, a car sales person wants to sell a | | | | any value to the item. See the difference; it comes |
| second hand car. He puts a value on the car for | | | | down to internal value on an item. |
| £2000. A customer walks into the car show | | | | If money was real they would have the same value. |
| room and asks "how much". £2000 answers the | | | | Also read back to the first three questions, it mentions |
| sales man. This price has become the unit of account; | | | | about the personal value on an object. |
| it is valued or measured at that price. | | | | Dave and Paula are financial guides who are always |
| In other cultures the unit of measurement may be a | | | | ready to assist you! |