Final answer:
In everyday conversation, 'money' usually refers to currency, which includes banknotes and coins, and also signifies wealth and the means for financial transactions. Money serves as a medium of exchange, unit of account, store of value, and standard of deferred payment.
Step-by-step explanation:
In everyday conversation, when people refer to money, they are typically talking about currency—which includes banknotes and coins. The concept of money encompasses wealth, as well as financial transactions and the means used in these transactions, such as banknotes, coins, or digital forms of money. Money has several key functions in society: it acts as a medium of exchange, a unit of account, a store of value, and a standard of deferred payment.
We measure money in an economy using different aggregates such as M1, which includes currency and demand deposits, and M2, which adds savings deposits, time deposits like certificates of deposit, and money market funds to M1. While money facilitates transactions as a medium of exchange, it also represents wealth when accumulated. Moreover, banks play an essential role in managing money, offering services that help individuals and businesses make financial transactions more efficient.