Final answer:
Money has three basic functions: medium of exchange, store of value, and unit of account.
Step-by-step explanation:
The three basic functions of money are:
- Medium of exchange: Money is used as a medium of exchange to facilitate the buying and selling of goods and services. It acts as a universally accepted form of payment, allowing people to trade without the need for direct bartering.
- Store of value: Money serves as a store of value, meaning it holds its purchasing power over time. It allows individuals to save their wealth and use it at a later time.
- Unit of account: Money acts as a unit of account, providing a standard measure for expressing the value of goods, services, and assets. It allows for easy comparison between different items and facilitates economic calculations.
Of these functions, the medium of exchange is often considered the most important in daily life as it enables individuals to acquire the goods and services they need.