Copyright © 2009–2011 National Academy Foundation. All rights reserved.

Unit 2, Lesson 4

The Function of Money

AOFPrinciples of Finance

Money is so common that we rarely think about what it is

• _____________ is any medium that is generally accepted as payment for goods and services.

• Money is used to get the things we need and want.

• The characteristics of money include: __________, ____________, __________, and ___________

What would it be like to live in a world without money?

Money facilitates the direct exchange of goods and services

• Before money was around, people used to _________ to obtain the goods and services that they needed.

• People traded jewelry, shells, livestock, stones, tools, and much more.

• Bartering wasn’t very efficient or convenient.

• Bartering requires a “_________________________________”—a rare occurrence.

Describe a time when you bartered with someone for something that you wanted.

• People use money when any ____________________is purchased.

• Money ensures the successful exchange of one item for another.

• Money serves as a way for people to get goods and services they do not produce with ease.

How does using money as a medium of exchange simplify your life today?

Money enables us to easily trade goods and services

Money is a way to hold wealth

• Money is a store of value and can be used to ____________________

• You can store the value of the goods and services you produce.

• You can save the value of what you make today to purchase items in the future.

• __________, __________, ___________, and ___________are just some of the ways that people hold wealth.

What are some of the advantages and disadvantages of storing wealth as stocks, bonds, and/or real estate?

Money is a standard unit of measurement

• Money is a unit of __________

• The price of all the other ________________ are measured in terms of money.

• Money allows you to ___________ goods and services by a common attribute.

• Items become valued in terms of dollars or portions of a dollar.

Money simplifies trade

• If used appropriately, money can make life easier.

• Money serves a specific purpose in society.

• Money is a _____________ and is required for survival.

• Money should be managed and used responsibly.