The answer seems simple enough, yet there are some false illusions as to what is and what is not money. Basically, money is anything that is commonly accepted in an economy as a means of payment.
Money in an economy serves 3 specific purposes:
1. Medium of Exchange – it’s an object that may be used to trade for goods and services
2. Unit of Account – This takes a medium of exchange and translates the value of economic goods or services into the medium of exchange’s terms. For instance, a gallon of gas may be translated into the medium of exchange’s terms as $5 for one gallon.
3. Store of Value – just means that the medium of exchange will retain much of its value into the future.