Final answer:
The three functions of money are: medium of exchange, store of value, and unit of account. Something can still be considered money even if it does not fulfill all three functions. Bitcoin can be considered money because it serves as a medium of exchange and a store of value.
Step-by-step explanation:
The three functions of money are:
- Medium of exchange: Money can be used to buy goods and services. It acts as a common measure of value, allowing people to trade without the need for barter. For example, instead of trading a cow for a loaf of bread, you can use money to buy the bread.
- Store of value: Money can be saved and used in the future. It holds its value over time and can be easily stored and retrieved. For example, you can save money in a bank account.
- Unit of account: Money is used as a standard measurement of value. It allows for easy comparison of prices and helps determine the worth of goods and services. For example, prices of different items can be compared in terms of money.
Something can still be considered money even if it does not fulfill all three functions. For example, Bitcoin can be considered money because it serves as a medium of exchange and a store of value. However, it may not serve as a widely accepted unit of account.