Everyone > uses money. We all want it, work for it and think about it. While the > creation and growth of money > seems somewhat intangible, money is the way > we get the things we need and desire. The task of > defining what money is, > where it comes from and what it's worth belongs to > those who dedicate themselves to the discipline > of economics. Here we look at the multifaceted characteristics of money.....
Medium of Exchange
Before > the development of a medium of exchange – i.e., money – people would > barter to obtain the goods and services they needed... > Two individuals, each possessing some > goods the other wanted >, would enter into an agreement to trade.
This early > form of barter, however, does not >provide the transferability and divisibility > that makes trading efficient. For instance, if you have cows > but need bananas, you must find someone > who not only has bananas but also the desire for meat. > What if you find someone who has > the need for meat but no bananas and can only offer you bunnies? > To get your meat, he or she > must find someone who > has bananas and > wants bunnies...and so on.